Like a bat out of hell part two: The outlook for oil

The second in a five-part series from the BRG energy and climate practice looks at the impact of Covid-19 on the global oil market and the trajectory of its recovery.

Oil prices in the US and across the world have collapsed as a result of combined supply and demand shocks. Global oil production increased substantially after Russia’s refusal to cut production during the Opec+ meeting on 6 March, which provoked retaliatory production increases from Saudi Arabia and the UAE. As part of a one-two punch, this supply shock was followed swiftly by a massive reduction in demand. Oil consumption plunged by c.29pc in April following the declaration by the World Health Organization (WHO) on 11 March that Covid-19 had become a pandemic. The knock-on effect on benchmark spot oil prices was immediate and dramatic (see Figure 1). The economic impacts of the coronavirus