The Impact of COVID-19 on Oil Supply in the Short Term

Abstract

The global oil industry is experiencing a major crisis as the COVID-19 pandemic endures. According to Standard and Poor’s (S&P) Global Plats, the energy analytics firm, the coronavirus has reduced global oil demand by as much as 4 percent or 4.1 million barrels a day in February 2020.for the full-year, to one million barrels. As of early April, Brent crude oil was trading at 30$/b. The disruption of the entire sector and the consequent loss of export earnings, a threat to livelihoods, and an end to the potentially progressive development trajectories is a major concern for many developing countries. The survival economy of oil-dependent countries are heavily reliant on oil production and losing this market is a huge shock, simultaneously, in 178 the extraordinary meeting of the Organization of the Petroleum Exporting Countries (OPEC) commended all OPEC and non-OPEC countries meeting a further adjustment of 1.5 Mb/d until 30 June 2020 to be applied pro-rate between OPEC(1.0 Mb/d) and non-OPEC producing countries(0.5mb/d) participating in the declaration of cooperation in order to achieve a sustainable balance and stability in the market. Energy Information Administration (EIA) expects Brent crude oil prices will rise to an average of 41.69$/b during the second half of 2020 and 65.19$/b on average in 2022, reaching 60$/b by the end of the year.