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See The Financial Scenarios Related To Oil

Written by Paulo Nogueira
Published on 29/04/2020 at 18:56
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In Order for Investors to Understand the Demands, the Indices, the Scenario and the Impacts in the Oil Sector, We Prepared the Main Estimates for the Current Economy. See

The global impact caused by the COVID-19 pandemic may develop the largest crisis in the oil sector in 100 years. To give you an idea, the segment indices indicated a 30% reduction in the price of a barrel of oil at the end of March.

In this sense, the demand forecasts for oil companies have dropped due to the ongoing spread of the coronavirus in Brazil and around the world. In addition, the economic devastation significantly influenced the current business environment.

The social isolation determined by the World Health Organization (WHO) and the reduction of industrial production have completely stalled the global economy, constrained oil demand and caused fuel prices to plummet.

According to Rystad Energy, by the end of April, global oil demand could drop by more than 11 million barrels per day. In contrast, Trafigura, an energy brokerage, predicts a decline of 10 million in the short term.

The impacts and demand indices had already been adjusted due to the continuous growth of the pandemic and, possibly, will continue to grow during the proliferation of the virus. Given the economic instability, it is worth knowing the demand forecasts.

To this end, we have separated the possible positive scenarios and challenges for oil demand. Check it out below!

Indices and Scenarios of the Oil Industry

In order for investors to understand the demands, the indices, the scenario and the impacts in the oil sector, we prepared the main estimates for the current economy. See.

Worst Scenarios

Speaking about this matter, it is necessary to make it clear that the negative impacts are independent of one another. In this sense, the worst scenario for oil companies is the extension of social isolation and the limitation of means of transportation worldwide.

Another negative point is the slowing down of the virus to resurge stronger months later. This situation is quite similar to the Spanish flu in 1918.

Moreover, people may continue to fear the virus, thus maintaining social isolation. As a result, air travel may not resume until the end of 2020, and countries will continue to have closed borders and the signage present.

It is worth highlighting Saudi Arabia’s role at this moment. The country, in turn, has committed to producing a larger amount of oil and exporting raw materials at low prices and, consequently, may face difficulties with oil offerings.

Best Scenarios

Positive indices depend exclusively on each other. In this sense, let’s suppose that Saudi Arabia finds enough customers to sell the oil being offered on the market, thus managing to lower the price and increase investments in industrial climbing.

Another positive point is if China, India, and other oil-importing countries could increase their stock reserves, closing more deals with oil industries at low prices.

People who enjoy traveling, for instance, realize that social isolation is no longer necessary and begin to take advantage of the low prices of travel packages.

Developed countries, in turn, with significant financial resources, invest in reopening new businesses in this segment.

Conclusion

Oil companies do not show positive results during the pandemic. However, it is not possible to accurately diagnose future indices and impacts.

After all, until the end of last year, no one could predict that a virus would significantly impact the global economy. Therefore, keep an eye on the trends, the positive and negative points for oil industry demand, until you get involved in security camera installation.

Furthermore, the current scenario may change depending on the economies of the countries. Saudi Arabia, for example, could find customers to structure oil demand. Therefore, we can see transformations from all sides.

This article was written by Beatriz Barros, Content Creator of Industrial Solutions.

Paulo Nogueira

Graduated in Electrical Engineering from one of the country's technical education institutions, the Instituto Federal Fluminense - IFF (formerly CEFET), he worked for several years in the offshore oil and gas, energy, and construction sectors. Today, with over 8,000 publications in online magazines and blogs on the energy sector, the focus is to provide real-time information on the Brazilian job market, macro and microeconomics, and entrepreneurship. For questions, suggestions, and corrections, please contact us at informe@clickpetroleoegas.com.br. Please note that we do not accept resumes at this contact.

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