Corona Virus: Oil prices are at their lowest in 18 years

Oil prices recorded a decline to levels not seen since 2002 in light of the collapse in demand for crude oil and the outbreak of the Corona virus.

The price of Brent crude fell to $ 22.58 a barrel on Monday, its lowest level since November 2002.

The price of US West Texas Intermediate crude fell to below $ 20 a barrel, to approach the lowest decline in 18 years.

And oil prices fell by more than half last month, forcing companies to reduce or halt production.

In addition to falling demand, a price war erupted between Saudi Arabia and Russia earlier this month.

This war started after Saudi Arabia was unable to persuade Russia to support the production cuts agreed with other members of the Organization of Petroleum Exporting Countries (OPEC).

This came at a time when oil refineries all over the world are processing less crude oil, as well as lower demand for transportation by airlines and fewer cars available on the roads in light of countries taking tougher measures to combat the outbreak of the Corona virus.

Devin McDermott, an expert at Morgan Stanley, said the collapse in demand as a result of measures taken to tackle the outbreak of the Coronavirus has now become the most influential major factor.

McDermott added that oil prices “were unable to keep pace with the situation in light of the increasing measures (to prevent the spread of the virus) and reports that this could lead to a decline in global demand by 20 percent, which could lead to the depletion of stocks,” citing the expectations of the International Energy Agency and its headquarters Paris.

Shale oil production firms in the United States have also been particularly affected by falling prices since early March.

McDermott said that there are increasing calls for the United States to suspend the collection of operating fees from drilling, buy more oil to fill the US strategic oil reserve, or restrict production in states such as Texas. The United States is currently the largest oil producer in the world.

McDermott added: “Since the 1930s, states have had the power to determine (the size of) oil and gas production in order to support oil prices.”

He continued: “Although this step is not widely applied today, federal and intra-state regulators still have the ability to impose restrictions on production levels.”

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