There are many strange swings in financial markets since the coronavirus pandemic broke out, but none has been more shocking then US oil trading. The price of a barrel of West Texas Intermediate (WTI) fell to -$37.63 per barrel, this is lowest since 1983. That means oil producers paid buyers to take oil from them.
The prices were $50 then came to $30 and now it is negative. Nobody wanted crude oil as there is no place to keep it and the estimated storage of the world is 60% filled. This is the biggest financial loss due to the coronavirus as it is hard to quickly fix the oil industry problems. But the coming June contract records are still above $20 a barrel which is not that low.
The oil infrastructures are complicated and it is hard to turn off the tap as restarting them when demands return will cost heavy to the producers as it requires manpower and money both. The reason for such loss is that due to lockdown people, industry and flights are not working and they are using no oil and because of that there is so much unused oil and there is no room to store it.
But when the price of crude oil falls India gets the benefit as it gives extra revenue to the government. India is a big importer of crude oil as much as 85% of it. With a decrease of $1, India saves $29000 crores which in turn benefits the buyers of petroleum products.
But the price of WTI is in minus not of Brent Oil and India takes oil from Brent Crude Oil Company whose price is still above $20 so the loss of WTI will not give benefit to India in any way. But this pandemic is going to affect the whole world economy which will take time to come back on wheels.
About the Contributor…..Mahima Pandey is a student of Bachelor of Journalism and Mass Communication (4th Semester) in the Centre of Media Studies at the Allahabad University. She is an active writer who write articles on different topics such as current issues and many other matters also.