COVID has taken the attention off of a lot of things. With a decrease in travel we’ve seen gas prices drop, but there may be more behind the scenes according to experts.
Among all of the concerns surrounding COVID-19, one of the places you’d least expect issues is the Oil industry. However, according to experts, there’s a bigger risk than you might think there is. Oil prices in particular are in quite a bad place.
Everything sort of hit the fan when this last Friday, OPEC plunged in prices. Discussions on production cuts ultimately fell through, no agreement was reached and the prices were hit the hardest.
Whatever the ultimate cause was the failed agreements, it has led to some panic in the industry.
“Crude has become a bigger problem for markets than the coronavirus, It will be virtually impossible for the [S&P 500] to sustainably bounce if Brent continues to crater.”
Adam Crisafulli
Due to a lack of travel demands, thanks to COVID-19, gas and oil prices have effectively plummeted.
Before this freaks you out to the point of hysteria it is well worth noting that there is not an immediate shortage. In 2015 barrels dropped to 25$ which was unprecedented and caused widespread panic in the industry. Ultimately this means more for stockholders than it does for consumers.
Numerous countries still plan to maintain quotas, produce barrels and move on. However, with COVID causing more and more breakdowns in travel, it could be accurate to say this optimism from others will be short lived.
