Oil and gas tanks are seen at an oil warehouse at a port in Zhuhai, China October 22, 2018. — Reuters pic
The drop is considered the largest oil price decline in modern history and was one of the three biggest declines since World War II as well as the longest-lasting since the supply-driven collapse of 1986. Oil is essentially used for transportation — that is 57 per cent of the overall demand — and if people are working from home and not travelling for business or tourism, they are not consuming oil.
“So it is possible that what we’re seeing today is a permanent shock to the oil industry, reducing its growth potential, traditionally closely linked to the growth of economic activity,” he said. Petroliam Nasional Bhd has said that it aims to become a net-zero emitter of greenhouse gases by 2050 and also plans to increase its investments in RE.
The price reached its highest level at US$71.75 in January but fell to US$15.98 a barrel in April, its lowest since June 1999. In an effort to relieve storage pressure and balance the market, Opec+ reached a deal to reduce crude oil production by 9.7 million barrels per day in May and June. In August, production cuts began to taper but uncertainty around Covid-19-induced demand shocks continued, leaving the door open for the return of market instability.
In December 2019, participating producers decided to deepen the production cut by 500,000 barrels per day to 1.7 million bpd effective January 2020, subject to the full conformity of participating members. For 2021, the oil cartel estimated demand growth would rise by 6.2 million on an annual basis, representing a downward revision of another 0.3 million barrels from its October report.