Coronavirus and Global Oil Market – Impact and Future Possibilities
23 March 2020
Since January 2020, coronavirus has impacted several
industries in the world. Global oil market is severely affected due to
pessimistic oil demand outlook and comparatively low oil prices. As COVID-19
has spread in other countries
apart from Asian nations, the oil market will continue to suffer losses
in this year, but the question remains: how deep and for how long? Let’s try to
find an answer!
Coronavirus Impact on Global Oil
Market
Coronavirus affects the oil market in two ways:
1.
Travel Restrictions
The global travel restrictions due to coronavirus have
affected the supply chain. This lead to limited use of jet fuel and industrial
activity declines as companies send workers home, which results to less
production of oil and oil-based products.
2.
Stock Market Reaction
The global stock market is reacting negatively to the
effect of coronavirus outbreak. It builds a projection of global oil demand
over the long-term.
Top 10 Crude Oil Producing
Countries
As per Export
Genius market research report, the United States of America shared 18%
value to total oil production in the world in 2018. As the U.S. has also
affected with the covid-19, the country has also cut oil production. Today, all
top oil producing countries are also coping up with the pandemic.
Country |
2018 Share |
United States |
18% |
Saudi Arabia |
12% |
Russia |
11% |
Canada |
5% |
China |
5% |
Iraq |
5% |
Iran |
4% |
United Arab Emirates |
4% |
Brazil |
3% |
Kuwait |
3% |
Crude Oil Imports by Country
According to global
countries trade data, China stood as the top importer country of oil in
2018. Take a look at top 10 oil importing countries. All these countries are
affected to the coronavirus, which may impact on their oil imports.
Country |
2018 Share |
China |
20% |
United States |
14% |
India |
10% |
Japan |
7% |
South Korea |
7% |
Germany |
4% |
Netherlands |
3% |
Spain |
3% |
Italy |
3% |
France |
3% |
Crude Oil Exports by Country
Who are the top exporting countries of crude oil?
Russia is the largest supplier country of oil, which shared 14% value to total
exports in 2018. The exports of 2020 are likely to be affected due to
coronavirus as all these countries are struggling with the virus.
Country |
2018 Share |
Russia |
14% |
Iraq |
10% |
Canada |
7% |
United Arab Emirates |
6% |
Kuwait |
5% |
Iran |
5% |
United States |
5% |
Nigeria |
5% |
Kazakhstan |
4% |
Angola |
4% |
Covid-19 was first identified in China, where it
caused an economic slowdown for the world’s largest energy consumer. Decline in
oil demand has led to fears of over-supply for fuel and oil products and a
resulting fall in prices. Now to control this situation, the OPEC countries on 6th March
2020 have agreed to cut another 1.5 million barrels a day from production.
Yet, while the possibility of a major supply correction remains in the cards, a long-term correction will require to a restoration of oil market confidence in economic growth and future of oil demand picture.