Crude oil prices remained low as the novel coronavirus known as COVID-19 that emerged in China continues to spread worldwide while keeping pressure on global oil demand.
Assessments indicate that oil prices have fallen. China consumes about 14,000,000 barrels per day of oil, while the country has not yet returned to its normal situation. This trend has disrupted the market demand for oil. Of course, the downward trend that we have seen so far does not appear to be the main fall in oil prices.
China is still using its previous oil purchases, and if it runs out
previous purchases and does not make new orders for oil, we will witness more
decrease in oil prices.
Since Monday this week, the various U.S. stock market indices have been down. On the other hand, we have seen lower prices for copper and some other metals, indicating general declining value of energy.
Given the OPEC and OPEC+ meetings, which are going to be held in the future days, there has been no sign of an agreement between Russia and Saudi Arabia so far. The reason for this disagreement seems to be the economic pressure that Russia is enduring. Of course, the $49 oil could be justifiable and proper for Moscow.
On the other hand, Russians know that if they reduce the supply of oil to the market, their rival, American Shale oil will take their place.
As a result, it seems less likely to Russia and Saudi Arabia reach an agreement. So far, no agreement has brokered between these two countries, but Moscow and Riyadh may have some behind-the-curtain deals. In this case, oil supply will remain steady.
Demand has fallen as South Korea, which is an oil consuming country, has become infected with the coronavirus. If the same thing happens in Japan or the United States, the coronavirus pressure on oil prices will be obvious.
Given that oil demand often drops in the first half of the year, the U.S. oil price, which now stands at about $49, seems to be at least $45 a barrel. In general, any changes regarding the coronavirus, OPEC and OPEC+ agreement could affect oil prices.
From our partner Tehran Times