Well, the coronavirus is not just affecting the health of the whole world population, but it also impacted the oil market into the shock to spill over the global supply chain. Ripple into the other parts of the sectors of energy, IEA (international energy agency) said in a report on Wednesday.
The oil prices crumbled because of the pandemic situation the disease has created in the world. It started slashing global fuel consumption production cuts from OPEC producers and Russia.
Crude oil prices ended the volatile quarter with the most significant losses in the entire history and declined about 55% in the month of March. Prices also plunged to the lowest level after 2002 on Monday.
However, about five million barrels of the oil extracted worldwide daily are not attracting high enough premiums to the cost of the oil extracted in the field, according to the Paris-based IEA agency.
Western Canada producers have prices available that have dropped to single digits, and the instances of the negative rates are also emerged in the North America parts for the other grades, as per the IEA report.
Oil producers have said by implementing the significant reductions to their spending on a new production with the initial cuts near about 20 to 35% range.
Similarly to what was previously planned for 2020, as the report said, international energy agency had estimated earlier that 50 to 85 % of drops in the income for the selected producer countries in the year 2020 compared to the last year 2019.
These declines could be higher, depending on the extent of the shock in demand. The plethora of oil majors will revaluate their existing portfolio to possibly leading another wave in the refinery closures.