Question

Give more details on the following answer

Question:

Give a detailed explanation about what is happening with the oil prices.

mention coronavirus, OPEC, Saudi Arabia.

give references

Answer:

Oil prices is dropping.Major causes behind the fall is given below:

• Increase in Supply.
• Decrease in demand and
• fall of monopoly power in oil producers.

The price of oil sunk to levels not seen since 2002 as demand for crude collapses amid the coronavirus pandemic.Oil prices have fallen by more than half during the past month as companies cut back or close production.Oil prices failed to keep pace,with growing (coronavirus)lock down measures and that could drive global demand down 20%,potentially pushing the world to run out of storage capacity.

Organization of petroleum exporting countries (OPEC) controls almost 80%of the world's oil reserves.OPEC is the main influencer in fluctuations in oil prices.OPEC and its allies due to covid 19 outbreak,agreed to historic production cuts to stabilize prices,but they dropped to 20 years lows.Supply and demand influences oil prices to change.From global perspective,political instability in middle east causes oil prices to change.

Saudi Arabia is the second largest oil producer in the world.It will suffer financially from cheap oil.It can afford temporary falls in oil prices because they have substantial reserves.If low prices persist,Saudi Arabia may have to cut back on some of the social programms.

References:

BBC News(30 March 2020) Coronavirus:oil price collapses to lowest level for 18 years

Answer 1

A majority of the facts have been mentioned in the question above. Oil is one of the major resources that both developed and developing countries depend on for the functioning of the economy and obtaining growth. Countries that majorly influence the oil markets have seen a major hit with prices as low as never seen before. All the OPEC members have faced an issue of excess supply over demand. The demand has drastically fallen as major economics like India, China, USA, uk have either completely or partially shut their economies. This has lead to a stand still the production, travel and transportation which are the highest demanders of oil.  

Economics have moved their focus on handling the virus out break. Countries have discussed the situation in global markets and currently even domestic buyers are completely stocked up. In such a situation with no further capacity to store any more oil resources, the decision of reducing or holding back oil production is a sensible decision.