A few weeks after experts confirmed the Arab world started looking for oil alternatives, the World Health Organization’s update on coronavirus made the oil prices crash.
In an all-time ever fast drop, American oil giants Exxon and Chevron confirmed to the Associated Press they would have to axe jobs. On Friday, oil was traded at $44.76 a barrel, its lowest level since July 2017 when it was traded for about $50.
As a result, Russia and Saudi Arabia are set to meet next week to discuss a potential collaboration as the likely oil economy slowdown could affect the global one and thus threaten thousands of jobs in the industry worldwide.
Russia and SA will meet
For about a week, oil prices have dropped because of the coronavirus disease. As the global economy is dramatically slowing down, the world’s oil giants are considering new partnerships.
Oil prices sank for a sixth consecutive day early on Friday and were on track for their biggest weekly drop in more than four years as the coronavirus outbreak continues to roil global equity and oil markets.https://t.co/9k5JlFDOLc
— Markets (@NewsoftheMarket) February 28, 2020
As a result, Russia and Saudi Arabia have decided to meet next week to foster a global strategy. Their goal is to align on cutting back oil supplies in order to rebalance prices.
“The plan, which was discussed during a visit to Riyadh by Opec secretary-general Mohammad Barkindo in recent days, is designed to show oil producers are able to respond to the sharp reduction in demand created by a virus that has paralyzed global supply chains and stifled international travel,”, shared the Financial Times.
In the U.S, oil businesses are closing
As the Associated Press notes, coronavirus might only be a new chapter to what seems a doomed series of challenges in the oil industry.
“In the past five years, 208 oil producers have filed for bankruptcy protection after racking up approximately $121.7 billion in debt, according to law firm Haynes and Boone.”, adds the press agency.
In Texas, the U.S State that produces the majority of the gas, “the number of active rigs fell from 553 in October 2018 to 398 in January 2020”, slashing about 14,000 jobs, according to the AP.
Read on Alvexo: “Coronavirus Set to Deeply Affect China’s Economy”
Analysts are worried
Last but not least, analysts have expressed their worry over the next few weeks, saying that they “do not know what will happen to the demand in Asia and in Europe.”, read the Financial Times.
However, they have shared their enthusiasm toward the upcoming meeting between Russia and Saudi Arabia, hoping this will stop the price drop.
As coronavirus cases are increasing in the world, especially in Europe and in the United States, traders reminded the media that forecasts might be revised – as are the oil prices.