from Sputnik News:
The ongoing coronavirus pandemic, which has halted economic activities and travel, has crippled demand for crude, resulting in an oil glut and sending prices plunging, heralding more shocks to the industry.
Amid the destructive economic fallout from the COVID-19 pandemic, production shut-downs in the petroleum industry are imminent, writes Bloomberg.
Nosediving crude prices, oil stored offshore in tankers after refineries closed down over the coronavirus lockdown with experts concerned the world could run out of storage by May – these are just a few of the chapters in the currently unfolding oil crisis, which is about to enter a new phase.
Shut-downs in the industry are an unavoidable, albeit worst-case scenario for producers and refiners.
“We are moving into the end-game… Early-to-mid May could be the peak. We are weeks, not months, away from it,” the outlet cites Torbjorn Tornqvist, head of commodity trading giant Gunvor Group Ltd., as saying.
COVID-19 Oil Crisis
The coronavirus pandemic triggered a succession of dramatic phases.
As countries scrambled to slow the spread of the disease and avoid a collapse of their national health facilities, they installed protocols such as lockdowns that resulted in closed factories and staff sent home.
Overtime, the storages started filling up due to oversupply caused by life as we know it grinding to a halt, with borders shut and travel restricted.
Traders sought recourse in huge ocean-going tankers to store crude as they held out hopes for a resurge of prices ahead.
However, surging shipping fees and lack of available free tankers is a sign of what the future holds, claim experts.
A collapse in global demand for crude, and concerns over looming production shut-downs and the inevitable fallout impacting jobs, companies, banks, and local economies incentivized Saudi Arabia, Russia and other petroleum-exporting nations within OPEC+ to agree to slash their oil production by 9.7 million barrels per day, or over 20 per cent, through June, in a deal penned on 9 April.
However, the efforts failed to stop crude plunging to below zero in trading on 20 April, when the price for May oil contracts broke every low for oil prices since 1946.