According to the International Energy Agency (IEA), the effect of COVID-19 on the oil market will majorly obstruct global supply chains and also going to affect other segments of the energy sector. OPEC countries and Russia have already stopped production of petroleum products which has harmed the global oil market already and has put a bar on the global consumption of fuel.
The final quarter for Brent Crude was a volatile one as it suffered the biggest losses until now with a 55 percent decline in prices only in the
month of March. Global oil prices also dropped to the lowest since 2002 on Monday.
In this period of crises, five million barrels are getting extracted everyday on a global scale which is being unable to raise the desired profits so as to again extract it from the field was also told by Paris based IEA.
IEA has also mentioned in the report that oil prices in Western Canada has come down to single digits and in some parts of North America, negative prices are prevailing as well.
The agency had earlier estimated 50%-85% drops in net income for selected producer countries in 2020, compared with 2019, but these declines could be even greater depending on the extent of demand shock.
IEA also warned against the implications of oil price collapse on other energy sectors, adding a sustained period of low oil prices would affect the prospects for clean energy transitions such as natural gas.
“Oil at $25 a barrel would leave some international gas suppliers struggling to cover their operating costs, and the depressed spot market for gas would not provide any relief”, it stated in the report.