Oil demand slows faster than any previous forecasts, due to the survival of the economy paralyzed, and the survival of a large portion of the world’s population under domestic quarantine. The United States, Russia and Canada are the most vulnerable due to the price drop.
Oil consumption declined by 25%, or 26 million barrels, this week, due to domestic isolation measures to contain the Corona virus, which threatens 92% of GDP, according to a note from Jeff Kerry and Damian Corvin. There are about 900,000 barrels suspended by wells, and this number will increase around the clock
Nobody knows the depth of handicapped production, which will change the face of the energy industry and geopolitics. Oil is now heading to a negative area, which will create inflationary pressures from the oil supply shock due to discontinued production.
Brent will soon reach $ 20, with temporary rises in the downward direction, and the nature of production and transport by pipelines in Russia, Canada and the United States remains under great pressure, compared to means of transport by sea.
The current crisis contributes to the restructuring needed by the energy sector, and may give a boost to environmentally friendly energy sources. However, the commodity analyst hints that oil at such cheap prices will be the main pillar of the economy’s recovery after the current crisis ends.