THE FALL AND RISE OF THE OIL PRICE A Covid-Induced Rollercoaster
Key oil price drivers over the past 24 months
Since 2020, we have seen dramatic swings in the oil price. The onset of the global Covid-19 pandemic and the ensuing lockdowns meant that oil demand dropped significantly. In addition, in a ploy to gain market share from the US and ultimately from each other, Russia and Saudi Arabia both increased oil production. The result was a sharp price decline to below $20 per barrel (/bbl) in the second quarter of 2020. Both oil giants assumed the Covid restrictions and the accompanying decline in oil demand would be short-lived and lifted output, expecting that the other side would back down and bring some balance to the market. However, neither Russia nor Saudi Arabia wanted to cede market share and risk losing revenue once conditions returned to ‘normal’. The oil price subsequently plunged. In the end, the Covid restrictions lasted well into 2021, with some countries, most notably China, continuing to impose curbs.
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