On March 18th, the price of crude oil hit a 17-year low as it continues its way down, amid fears that the coronavirus lockdowns could lead to a global recession.
U.S. crude was down 84 cents, or 3.12%, at $26.11 a barrel by 0822 GMT, having earlier fallen to $25.83 a barrel, the lowest since May 2003.
Brent crude was trading down 37 cents, or 1.29%, at $28.36 a barrel by 0650 GMT, after dropping to $28.05, the lowest since early 2016.
“The oil demand collapse from the spreading coronavirus looks increasingly sharp,” Goldman Sachs said in a note forecasting a fall in the price of Brent to as low as $20 a barrel in the second quarter, a level not seen since early 2002.
Goldman Sachs also expects a demand contraction of 8 million barrels per day (bpd) by late March due to the pandemic and an annual decline in 2020 of 1.1 million bpd, which it said would be the most on record.
Iraq’s oil minister pleaded for an emergency meeting between members of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers to discuss immediate action to help balance the oil market.
Iraqi oil minister, Thamer al-Ghadhban, asked OPEC to help “urgently achieve” extraordinary meetings of the OPEC+ group to “discuss all possible ways” to rebalance the oil market.
“A deeply imbalanced supply and demand relationship will keep putting oil prices under pressure,” said Margaret Yang, analyst at CMC Markets in Singapore.
“Major oil producers are ramping up oil supply in a time when global demand is dampened by border controls and traffic bans.”
Meanwhile, Russian state lender Sberbank says that it has already been looking into worst-case scenarios for the economy amid the coronavirus pandemic. According to Sberbank CEO Herman Gref, the most stressful outcome includes oil going down to $20 per barrel and Russia’s national currency tumbling to 100 rubles per dollar.
Russia is struggling, as the ruble continues losing value.
At mid-day on March 18th, the ruble sits at 78.46 for $1.
Iran’s economy is also in a slump, with even more US sanctions being introduced, it attempting to counter the coronavirus, and its oil export sector suffering from both the lowering prices, as well as Washington’s sanctions.
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