The oil market in crisis

What's the oil price, how will this impact production and supply, and what does it mean for the upstream sector as a whole? Bookmark this page to get the latest news and views from our team of global oil market experts.

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Frequently asked questions

The coronavirus outbreak has derailed OPEC+, thrown the oil market into turmoil and sent an already unloved sector into freefall. Here we address some of the most frequently asked questions about the oil price crash and what it means for the energy sector. 

Why did the oil price crash?

What’s good for public health is bad for economies. Strategies to contain the spread of coronavirus, such as limiting people's movement, have directly lowered oil demand, putting downward pressure on prices. In the face of these challenging conditions, the OPEC+ group, made up of OPEC and its leading allies including Russia, failed to agree on concerted action to cut oil production to stabilise prices. The market is now facing the spectre of unrestrained production from the end of March once the current OPEC+ agreement expires. Meanwhile, oil demand is set to fall further as additional measures are put in place to limit the spread of coronavirus. The growing supply-demand imbalance is putting strong downward pressure on prices.

How do low oil prices affect the upstream sector?

For oil-producing companies and countries, revenues and cash flow will collapse. If low prices are sustained, high-cost producers will exit the market. More broadly, less money will be available for investment and distribution to shareholders. Companies will delay new projects and cut expenditure at existing operations. Dividend payments will be cut or offered as a scrip. Petro-states – including Russia and many Middle East countries – will be hit hard. Those with wealth funds will be better able to maintain government spending for a period, but those without funds will need international support or to make sweeping cuts.

What's OPEC's next move?

In the short term, the leaders of OPEC are focusing on increasing market share rather than stabilising prices. For 60 years OPEC has off and on taken a policy to balance the oil market, including the last several years when it has worked with its non-OPEC partners to manage supply. That approach has given way for now under the weight of oversupply and falling demand. OPEC's leading producer Saudi Arabia is currently guiding that it will increase its oil sales by over 2 million barrels per day in April. Other OPEC+ producers will also be free to maximise production.

The economic cost to oil exporters of low prices is very high. So over time, the impetus to try to rebalance the market grows. However, the effect of low oil prices also has a growing effect on other higher-cost suppliers such as the US. OPEC+ producers may want to wait to see the impact of low prices on those outside OPEC who have benefited from its policy of production restraint the last few years. 

Latest updates

3 April 2020

Can the world agree a deal to boost oil prices?

Oil-producing countries will hold an online meeting on Monday to discuss how to manage the market. The US will find it hard to make a contribution. 

3 April 2020

Coronavirus hits the petrochemicals industry with two major shockwaves

Frozen economic activity and volatile feedstock pricing will both have an immediate and dramatic impact. Our experts look at the implications of a looming recession and tumbling oil price, and explore how the industry might respond.

1 April 2020

What does the oil price crash mean for you?

How much do we think investment is going to fall this year, why is it different to the last price crash, and where are the costs most likely to be cut? Our team of global upstream experts tackles the industry’s burning questions in this 35-minute webinar.

1 April 2020

Will the coronavirus kill the oil industry and help save the climate?

“The price war and Covid-19 have really thrown the oil and gas sector into turmoil, and now we have companies really in survival mode,” said Valentina Kretzschmar, director of corporate research at Wood Mackenzie.

Read more from Valentina in The Guardian. 

1 April 2020 

Oil price crash: how Middle East, Russian and US upstream industry responses compare

In the latest episode of the MENA in Brief podcast, we discuss how the oil price crash is affecting upstream activity in the Middle East – and how that differs from the dynamics in Russia and the US.

31 March 2020 

The oil industry’s rapid response to the crisis

Deep cuts to investment and costs – are the Majors’ dividends sacrosanct?

27 March 2020 

The coronavirus crisis: assessing the impact on energy

Demand for oil, gas and power is recovering in China, but falling sharply in the rest of the world. Government intervention to prevent an economic disaster is critical.

26 March 2020

Webinar: Oil price crash - deep cuts in upstream investment

Join our webinar and find out: 

  • How much will investment fall in 2020? 
  • What has moved on since the last downturn?
  • Where will cuts be made?
  • What does it mean for investment in new projects?

24 March 2020

Could clean energy be the winner in the oil price war?

Renewable-energy economics suddenly look far more attractive. 

23 March 2020

What does the OPEC+ supply surge mean for refiners?

This is Alan Gelder, VP of Refining, Chemicals & Oil Markets, with three things you need to know.

See more updates  

Meet the team leading our oil market research

Ann-Louise Hittle

Vice President, Oils Research

Ann-Louise directs our Macro Oils Service and is a frequent contributor to numerous industry publications.

Latest articles by Ann-Louise

View Ann-Louise Hittle's full profile

Andrew Harwood

Research Director, Asia Pacific Upstream Oil & Gas

Andrew leads our upstream research coverage in Asia Pacific.

Latest articles by Andrew

View Andrew Harwood's full profile

Michael Moynihan

Research Director, Russia Upstream Oil and Gas

As a research director in our upstream team, Michael analyses developments in the upstream industry in Russia.

View Michael Moynihan's full profile

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