Global oil markets stand out in this regard. In April, futures contracts for West Texas crude plunged into negative territory for the first time, fetching close to minus $40 a barrel. This was a buyer’s wet dream – sellers were paying them to take the barrels off their hands. Think of the classic O.
The impact will be far reaching and is generally seen as a plus for the environment, with lowered emissions of the greenhouse gases linked to climate change. That is a cause for celebration, though the economic impact could herald unforeseen ecological consequences if poverty levels, for example, rise in developing economies that rely heavily on oil.
And the pace of events triggered by the pandemic will have a disruptive effect across global value chains. “It is natural that higher-priced production is going to exit the market first i.e. highest producers on the cost curve get displaced first. This is generally regarded as unconventional and offshore production – Covid has already seen a permanent reduction in oil sand and shale oil production as an example,” Mackay said.