The market has overtaken the oil war … and Corona is the decisive factor in determining the


The phone call between US President Donald Trump and his Russian counterpart, Vladimir Putin, on Monday evening, during which they agreed to hold talks at the ministerial level in order to stabilize energy markets, contributed to an improvement in oil prices in trading on Tuesday, to levels above 21 dollars for West Texas crude and above $ 27 for Brent crude in midday trading in London

Experts noted that the phone call between the two presidents took place amid the growing pressure facing Trump by the shale lobby of the shale oil companies he met and with his administration several times over the past month, according to the Wall Street Journal.

The shale lobby is concentrated in the states of Texas and the Midwest, which usually votes for the Republican Party. Thus, Trump, who is preparing for a second term in November, desperately needs help from those companies that affect his political future.

For his part, Putin also fears the repercussions of the collapse of oil prices on his political future amid the deteriorating living conditions in Russia. According to the expert on the American Council on Foreign Relations, Thomas Graham, the stagnation in incomes increases the popular tone in Russia, and the Russian government currently does not find sufficient financial resources to support companies and the collapsed economy and the ruble, which continues to decline against the dollar.

Putin had promised the Russian people to pump 400 billion dollars in reviving the economy between 2020 and 2024, but the Corona epidemic spoiled all of this and was surprised by the oil war that broke out between him and the Saudi ally out of control, and therefore both Putin and Trump are keen to save their political future in this Critical conditions.

According to the American Council on Foreign Relations CFR website, American expert Amy Javier confirms that controlling the virus “Covid 19” may be the only decisive factor in stopping the vertical collapse that oil prices are currently experiencing, as the crisis experienced by oil prices is the crisis of global demand collapse On oil raw materials and refineries in Europe, America and some Asian countries stopped refining due to the closure of economies and the suspension of air traffic and transportation, as the streets were empty of cars, except for a few.

Hence, the oil war between Moscow and Riyadh, and the flooding of the market with oil, may have acted as a result of the price collapse, but it is not the main cause of the oil collapse. Request. In her analysis, American expert Javier believes that the Corona epidemic has reduced global demand by 50% since the beginning of the year.

This crisis differs from the oil collapse crisis that occurred at the end of 2014. In that crisis, producers were betting that lower oil to lower levels would get the high-cost raw materials out of the market, especially shale oil. In this crisis, there is no demand due to the closure of the oil-consuming economies. In America, the epidemic is increasing and Trump is extending the closing period for a full month. There is doubts about the return of the Chinese economy to movement and industry this month, despite official Chinese statements.

Analysts in the Financial Times say that what keeps oil prices from falling below $ 20 levels so far are warehousing operations carried out by governments, refineries and some investment banks, according to the vision of the major oil trading companies, including Vitol, Trafigura and Ginver, which trade in 15 One million barrels of raw materials per day.

According to these companies, the volume of global demand may turn negative after filling commercial and government reserves and tanks. The “Keros Satellite” data, which monitors ship traffic, indicates that global stocks increased by more than 100 million barrels in February. The number may have increased further in March.

Analysts expect Reuters to shrink global demand by between 0.7 million and five million barrels per day in 2020, which is likely to exceed the decline in 2009 during the global financial crisis. Saudi Arabia is finding it difficult to sell additional crude to refiners due to higher freight rates and lower demand. Global oil consumption is likely to drop by 12 million barrels per day in this quarter, or 12%, the largest drop ever recorded, according to Bank of America.

And the Swiss UBS yesterday predicted a decrease in the demand for oil by 10 million barrels per day or more in the second quarter of this year 2020. He said that Brent and West Texas Intermediate prices need to reach less than $ 20 a barrel in the second quarter of 2020 in order to Inventories beyond storage capacity on the ground have ceased.British Standard Chartered Bank expects oil demand in April to drop by 18.5 million barrels per day compared to 10.5 million barrels per day in previous forecasts due to global public isolation measures caused by the Corona virus. The bank now expects oil demand to drop in 2020 by a record average of 5.43 million bpd.

“The most stringent restrictions on movement in government response to the Corona virus have exacerbated our expectations for the shock of oil demand,” bank analysts said in a note. The bank also expects a market surplus of 21.8 million barrels per day in April, 19.5 million barrels per day in May and 13.7 million barrels per day in June.

Many oil experts believe that the current price crisis is caused by the “virus coffed 19” and that any agreement on reducing production may not be effective unless the virus is controlled or there is a way for the continuity of companies and trade and the movement of buying and selling.

Government-imposed restrictions to combat the spread of the virus, which include social spacing, make highways empty, airports closed and bus and train stations free of passengers, and large and small factories have stopped production. These factors create the global demand for raw materials and oil derivatives.


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