The price of crude oil fell dramatically in the international market. This is because of the coronavirus outbreak. On Thursday morning, the stock prices of crude oil have closed at the lowest levels. The increased demand for gasoline could be a reason for it. Moreover, WTI crude was trading down to 2 percent. This is a massive loss for investors.
During the coronavirus outbreak’s peak, the price of crude oil in the U.S. market has gone down to zero dollars per barrel. In the future, it is expected to get prices of crude oil back. This is because of unlocking procedures that have allowed the people to move outside from home. The more the people will travel more will be the crude oil is consumed. However, every person is waiting for the discovery of the vaccine. It is the only hope for crude oil investors. That can recover significant losses.
More than 15 million people have been infected with the coronavirus. This has created an environment of fear. Due to which people are not moving outside from home and limiting their traveling needs. This ultimately affects the crude oil industry globally. You should need to know that the Gulf countries’ economy depends on the demand for crude oil.
Here are some reasons for the oil price drop
- As you all know, most countries have put lockdown due to pandemic. In which no one is allowed to move outside from home. This is one of the main reasons behind the decrease in demand for crude oil in the international market. But now the situation is not that bad, and various countries are going through the unlock process.
- At the start of 2020, no one has imagined that the situation will worsen in the upcoming months. Due to the sudden decrease in demand, various potential investors have lost billions of dollars in the crude oil market. The economy of Gulf countries is affected most due to coronavirus outbreak.
Fear of coronavirus
- Due to the pandemic, most international flights are canceled and remained restricted until the vaccine is discovered. This has indirectly affected the demand for crude oil in the global market. With the fear of viruses, people are avoiding traveling and moving outside. If the situation is not improved in the future, this sector may suffer from the decade’s worse condition.
Fewer buyers in the market
- After the lockdown, most of the countries have a full stock of crude oil. Due to fewer storage options, countries are avoiding the new purchase of the oil. However, many gulf countries are also offering storage facilities with oil but could not seem effective. Experts are predicting that the condition of crude oil is likely to improve in upcoming months.
The economy of the U.S., Russia, and Gulf countries is affected worse due to a drop in crude oil prices. Moreover, the situation is not likely to come into the routine. Some scientist has predicted that the vaccine may be delivered at the mid of 2021.