An Insight on the Coronavirus’ Impact on the Oil Market
NJ Ayuk, CEO of Centurion, spoke to German international broadcaster, Deutsche Welle about the impact of the Coronavirus on international oil markets.
How has the Coronavirus affected the oil market?
Affected the oil market by allowing demand and prices have gone down. Let’s say they were hovering around $60 [per barrel], right now they are around $50, and you are really seeing the market going crazy with what is going on around the Coronavirus, because there is slowing demand, a slow in jet fuel demand, so it’s really sending the market into a crisis right now.
A big chunk of that slowdown in demand comes from China, is that the main driver, China not needing so much oil at the moment?
It is one of many, right now, you have a lot of industrial bases around India, Europe, the United States, where people cannot get together; a lot of people are staying home from big gatherings. You are going to see a big decline in jet fuel, industrialization and manufacturing. It is not just China, though China is a big part of it – but it is going to be bigger and right now it’s even bigger than China, causing a global concern with Coronavirus around oil prices and the oil markets.
What can we Expect from the [OPEC] meeting tomorrow?
OPEC is always a great place to be when negotiations and back and forth happens, you are going to have to ask the big questions. Do we go on a 3,000 to 5,000 cut to make sure that the market is stabilized so that consumers and producers can both live with? Are you going to work a supply glut? That is what is going to happen…you are going to see who wants to cut and who doesn’t want to cut.
This big thing with Russia included really gives a chance that consumers can really stop feeling the pinch and that producers can stabilize and grow the market.
Who will be for a production cut and who will be against it and why?
It depends, right now there is a lot of production of the market – 800,000 barrels out of Libya, and escalating sanctions out of Venezuela; that’s already a lot of oil that’s out of the market, so it’s left to be seen how Saudi Arabia, which is one of the biggest producers, together with Russia, how they can come together. I think there is a growing dynamic right now where the Russians don’t really want to push for a cut, but they are going to have to in order to stabilize the market, and the Saudis are always open to having an honest discussion. Most African states are small and so non-OPEC states would have to share in the pain to make sure that we all stabilize the market.
Watch the interview here: