Coronavirus and Global Oil Market – Impact and Future Possibilities

23 March 2020
Crude Oil Trade Data

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.

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