World quarantine measures against coronavirus reduce the consumption of petroleum products and affect the price of oil. Russia and Saudi Arabia are fighting for the consumer. The last one wins.
Energy expert Mariia Yakovleva told about this in a comment for Kosatka.Media.
She noted, that all countries in the world had implemented severe restrictions in connection with the introduction of quarantine against the coronavirus COVID-19: termination of passenger air traffic; termination of passenger rail traffic; significant restriction of passenger transportation by public transport (10 people in fixed-route taxis, 20 people - buses, trolleybuses, trams); in cities where a state of emergency is imposed, public transport stops.
“These restrictions will significantly reduce global consumption of petroleum products and will significantly affect the price of oil. We already see the first “swallows”: the price of oil has fallen to a record low since 2016 below $30 per barrel”, Yakovleva said.
According to the expert, a large-scale reduction in the consumption of petroleum products and a drop in oil prices launched a war between the largest world producers of Saudi Arabia and the Russian Federation for their consumers.
“The cost of production in Russia in recent years has increased from $17 to $25 per barrel and it is significantly losing to Saudi Arabia, which has a cost of $5-7 per barrel. The price of oil has every opportunity to drop to $15 - $20 per barrel – it will be very impressive for the Russian budget and absolutely invisible to the Saudis”, Yakovleva said.
To recap, the cost of Brent oil fell below $31 per barrel.
The co-founder of the Energy Strategies Fund, Yurii Korolchuk, believes that quarantined does not significantly affect the consumption of petroleum products and their prices. Although a certain cheapening of fuel can be expected.