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The events on the oil market in March and April 2020 are significant.
- The split between OPEC and Russia triggered and oil price war and sent oil prices down to $20 per barrel WTI – the lowest oil price since over 20 years.
- The global economic decline caused by the coronavirus-pandemic turned the oil price war into an oil price crisis – the oil price is volatile, hovers between $20 and $25 per barrel, and threatens to fall below $15 per barrel.
- OPEC and Russia agree to cut oil production, but not enough to counter dwindling global oil demand – the oil price falls another 10%.
- On Easter Sunday, OPEC and non-OPEC oil producers cut a deal to reduce oil production worldwide – the oil price settles at $20 and below.
- OPEC wants to have talks about more production cuts – the oil price does not react.
In the short term, the chances that oil prices will rise above $40 per barrel or fall below $15 per barrel are closer to 50:50. In the long term, oil prices will increase. The question is how far it will go and where it will stay. The breakeven price for oil producers is probably the most important tool to find the real price for oil. Read the guidelines and recommendations on how to use breakeven prices and find the most reliable numbers here.