01 Jan 2021

Oil prices plummet in COVID era

Oil prices plummet in COVID era

Oil was such a valuable commodity in the pre-COVID era that it gained the moniker of black gold. It had the potential of generating enormous wealth and countries would even go to war over this precious commodity. That is, until COVID-19 hit home.

Although global crude prices made some slight gains moving forward into 2021, 2020 will be remembered not just for COVID-19, but also being one of the worst years for oil as its value plummeted by as much as 20%. The beginning of 2020 saw oil prices plunge as COVID-19 forced a spate of lockdowns and travel restrictions on an unprecedented level in modern history.

As the world has its hands full with the pandemic, the situation was further exacerbated by price wars between oil producing titans, Russia and Saudi Arabia amidst falling demand for oil and surplus capacity. WTI plummeted to a record low negative-$40.32 per barrel, while Brent fell to $15.98 barrel, the lowest since 1999.

Although prices have rebounded slightly from the Russia-Saudi Arabia saga in April and June, emergence of a mutant viral strain in the UK, fresh lockdowns in Europe and resurgence of outbreaks in previously safe places like Thailand, China and Vietnam, have weighed heavily on fuel demand and raised new alarm bells. 

The black gold, once considered to be an asset class that can be relied on in times of crisis, has been brought to its knees by the pandemic. As a result, analysts predict that oil prices are not expected to advance much in 2021 as the pandemic is unlikely to be brought under control in 2021, even with COVID-19 vaccines.