COVID-19 and the Big Oil Price Crash: Exploring the Anatomy

Kaushik Ranjan Bandyopadhyay ()
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Kaushik Ranjan Bandyopadhyay: Indian Institute of Management

A chapter in Sustainable Development Insights from India, 2021, pp 239-257 from Springer

Abstract: Abstract Crude oil prices have fallen drastically since the beginning of 2020 driven by the lethal double blow of economic contraction caused by the 2019 novel coronavirus disease (COVID-19) and suspension of an OPEC-NOPEC (OPEC+) deal due to defection of Russians. Eventually a price war got waged by Saudi Arabia and led to a protracted disequilibrium and volatility in the world oil market. The worst fallouts could be observed when Western Texas Intermediate, the benchmark crude oil futures price plunged below zero for the first time on 20th April 2020 and made it a Black Monday. The huge volatility made energy companies file for their bankruptcy; the shale in the US and the much-hyped American energy dominance got severely battered; caused huge job losses; and bruised the financial institutions that have been backing these industries. The coupling of unprecedented demand and supply shocks tested the oil market and its storage capacity to the limits. To gauge these issues and the imbalances that has been building in the system more carefully, the chapter examines the changing dynamics of oil markets in the COVID-19 affected world in deeper details.

Keywords: COVID-19; Crude; WTI; Brent; Contango; Shale; Storage; Futures (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/978-981-33-4830-1_12

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