COVID-19 and global oil markets

Abstract

The COVID-19 pandemic that spread rapidly across the world in early 2020 delivered a profound shock to oil markets and the broader fossil fuel industry. With demand for energy in free-fall as a result of the pandemic, world oil markets were simultaneously hit by the March 2020 “Oil Price War” between Russia and Saudi Arabia, which promised to significantly increase global supplies. As a result, global oil prices fell to multi-decade lows, and producers rushed to find storage space on land and sea for their oil rather than sell it at a loss. Remarkably, the price of West Texas Intermediate (WTI) fell into negative territory in mid-April 2020 as traders holding contracts for physical delivery were forced to pay others to take oil off their hands due to lack of storage space. This contribution maps the intersecting factors at the root of this moment of extreme crisis, asking what all this might mean for the organisation and power of the global oil industry moving forward.