Duel between Covid-19 and oil prices continues
Wednesday, July 1, 2020 0:01
By GEORGE WACHIRA
The Covid-19 is playing a major havoc on nearly all oil industry supply chain players.
Covid-19 prevalence, especially in high GDP nations like USA, China and European Union, has become a good calibrator of oil price movements.
Oil markets fear of virus resurgence and reduced oil demands has in the past few days seen a reversal of oil price recovery, which are now heading back to $40, and with indications that prices could drop further depending on how the virus resurges in the US.
There is a consensus among major oil players that a “return to normal” oil demand will take longer than previously anticipated, with the low oil demands and prices not expected to recover to pre-March levels until after 2021.
Right here in Kenya we witnessed a lower-tier independent oil explorer Tullow Oil declare a Covid-19 justified force majeure on its contractual obligations with the government
Oil producing countries heavily dependent on oil for national budgets are having to scale back their economic ambitions and public service levels, while some of them are digging deeply into their sovereign wealth funds
It is the economic performance of the two largest economies (USA and China) that determines how and when global oil demands and prices move.
