Global Oil prices are crashing due to vaporizing demands credited to the world wide lockdown due to the coronavirus pandemic.
It is affecting every oil producing country and steaming fears of a vast post Covid-19 recession to even the world’s biggest economies.
United States of America
The US crude, also known as West Texas Intermediate, is currently trading in negative territory at $-2 per barrel.
This is the lowest point ever. The last time prices dipped so low was in 1915 when it traded at 40 cents.
In contrast, Brent crude is trading at $26.36.
The New York Mercantile Exchange (NYMEX), a commodity futures exchange owned and operated by CME Group of Chicago, was quoted on Monday to have said WTI May futures could drop into negative territory.
“It is now possible to negative price for May futures only,” a CME Group spokesman said.
The percentage change in price is estimated -110% by Bloomberg energy terminal.
Canadian oil prices appeared to be even lower, with finance blogs reporting that some Alberta oil was selling for as little as minus-$4.68 per barrel.
The slide came after investors realized the oil production cut announced last week by OPEC and Russia would not be nearly enough to offset the massive drop in oil demand the world has experienced due to the COVID-19 shutdowns.
The price of Bonny Light, one of Nigeria’s crude grades, has dropped to about $12 – $13 a barrel this week. The price is $15 lower than the value of the global benchmark if crude oil, Brent crude, which stands at $28, as on Friday.
The development means that the current selling price is below the cost of production for Nigerian crude producers, which is estimated at $22 and the budgeted crude benchmark of $30 per barrel.
It appears the record supply cut by the Organisation of Petroleum Exporting Countries (OPEC) and its allies (OPEC+) could not save the crude, as the value dropped due to closure of industries across the world.
At the beginning of 2020, WTI crude was trading at $60 per barrel.
However, reduced demand due to the coronavirus pandemic and a price war between Saudi Arabia and Russia saw prices plummet.
This article is fact-checked.
A writer, poet and social activist with focus on Africa, governance and social values.