The oil and gas industry has had a rollercoaster of a decade. From the highs of 2010, to a crash in the middle of the decade, to a stabilising normal, the industry has endured high highs and equally low lows.
Since the oil price crash in 2014, global fuels consumption has grown at a rapid pace, but even back then, a concern over slowdown in economic growth weighed on oil market fundamentals. Demand is not the only concern, as US shale has continued to be the biggest single source of production growth year after year as investment dried up in many regions, and OPEC has pushed to balance the markets.
Nevertheless, 2020 has the potential to throttle the oil and gas industry even more. The COVID-19 pandemic has brought demand to a crashing halt. The price war launched by Saudi Arabia in March 2020 didn’t help matters. For a period, the price of WTI crude actually went negative as storage tanks were full with oversupply.
This has added yet another layer of uncertainty in oil markets. In 2020, global oil demand is expected to contract for the first time since the global recession of 2009. The situation remains very fluid, however, making it extremely difficult to assess the full impact of the virus.
STILL A MAJOR PLAYER
With all the hubbub surrounding renewable energy and electric propulsion, it’s easy to dismiss oil and gas as literally ‘fossil’ fuels: dirty, polluting fuels of the past. But the reality is that oil and gas aren’t going away anytime soon – not overnight, in the next year, or even the next decade. Alternative energy sources may be new and trendy, but the reality is that they aren’t as cheap or as efficient as crude.
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