Oil prices plummet on decreased demand, prompting a deal between Saudi Arabia and Russia
The coronavirus pandemic has squashed demand and prices of oil, a significant stakeholder in economic stability.
Saudi Arabia Crown Price Mohammed bin Salman and Russian President Vladimir Putin, leading an effort with the Organization of the Petroleum Exporting Countries, agreed to scale back oil production amid reduced need.
Saudi Arabia will decrease its typical 12 million barrels by 3.3 million barrels a day; Russia will axe 2 million barrels from its normal 10.4 million barrels a day.
The agreement was made in an effort to restore oil prices and correct the subsequently upset economic equilibrium. Oil prices plummeted recently due to significant changes in demand, which has decreased sharply as people are staying home amid the COVID-19 pandemic.
The deal is one of many measures the globe is considering to quell economic distress onset by the novel coronavirus, which has penetrated 184 countries and regions; there are almost 1,583,000 confirmed COVID-19 cases and nearly 95,000 deaths worldwide as of April 9, according to Johns Hopkins’ Center for Systems Science and Engineering live tracker. In the U.S., there have been over 454,000 recognized cases — the most of any country in the world — across all states; the death toll surpasses 16,200.
Oil, which powers most of the world’s mobility, has a stronghold on the markets, with a considerable clutch on all energy-tied stocks. Sharp price decreases strain not only commodities — generally considered a safer bet — but also companies across the energy sphere which form a little over 5% of the S&P 500 index. Between drillers, refiners, transporters and wholesale retailers, historically low oil prices can decimate energy companies’ top-line revenue and stock prices.
Dips in oil faith drag the markets downward, which in turn could burst an already flimsy bubble. While sinking housing market values were the main root of the crash which kickstarted the 2008 recession, a sinkhole in oil could feed a similar despair.
Questions? Ask us at contact@govsight.co.
Like what you read but prefer to learn with your ears? Listen to the Insight Podcast by GovSight on Apple Podcasts, Spotify or Podbean every Monday.
Follow GovSight on Twitter @GovSight1, Instagram @govsight and Facebook @GovSight. Go to govsight.com to see how GovSight is making “Citizenship. Simplified.”
