In the hope of global demand rebound, oil prices surged. The production cuts and loosening lockdowns resulted in WTI futures increasing by 13%, to $33.32 a barrel. Brent prices rose 10%, to $35.72.
Oil is used in almost everything: plastics, cosmetics, clothing, and even soaps. Above all, it has become a critical component for the world to travel. 56% of its production ends in fuels: 12% is used to move planes and ships, while 44% goes to automobile tanks, according to the International Energy Agency (IEA). When the planet put brakes on the commodity because of the coronavirus pandemic, the business went into turmoil. Faced with an unprecedented drop in demand, large, medium, and small companies have been forced to stop their operations.
In April, OPEC and its allies reached an agreement to cut the production by 9.7 million BPD in May and June. Earlier this year, oil prices tanked amid the coronavirus pandemic. Saudi Arabia and Russia conducted a bitter oil price war.
In Europe, most large companies have done their homework reasonably to protect themselves financially against any eventuality. However, the UK oil and gas industry could lose up to 30,000 jobs (one-third of the total) in the coming months. Diego Morin, an analyst at the IG consultancy, said it is forecast that the reduction of expenses and capital investments will be generalized among the majority of the industry participants.
Russia, the third-largest producer of crude oil on the planet, has a fiscal balance of $ 40 per barrel. – Production costs for the country’s oil reserves range between $ 10 and $ 30. Analysts say it can survive low oil prices for a decade.
Things are complicated in Venezuela, Angola, and Nigeria, having the largest proven reserves on the globe. Experts believe these countries could hardly get through the next 24 months without extreme pain.