The novel coronavirus has gutted global demand for oil and triggered a price war between Saudi Arabia and Russia that’s flooding supply.The one-two punch has sent the price of oil tumbling.It’s fallen about 60% since the beginning of the year, reaching lows not seen in nearly two decades.Industry experts expect large layoffs in the weeks ahead, with some companies letting go as much as 50% of their staff.Several firms, including Apache, have already laid off some employees, while Exxon has alerted contractors and vendors of planned near-term cuts.Visit Business Insider’s homepage for more stories.
The oil industry is no stranger to the boom-and-bust cycle. A glut of supply — often fueled by an international price war — drives down the cost of oil, dragging the industry along with it. Then prices eventually bounce back. “I knew it was part of what I signed up for,” said a former employee of the oil- and gas-exploration company Apache who was laid off on Thursday. “I knew there were past downturns, and I knew it was going to happen again.” We need your help: Have you or an acquaintance been laid off by an oil company? Please contact us at email@example.com or through the secure message app Signal at (646) 768-1657. ‘Unprecedented’ price shockEven to an industry experienced in downturns, the recent price shock remains unprecedented, David Doherty, an oil analyst at the research firm BloombergNEF, said.”Normally you get a supply shock or a demand shock,” he said. “You don’t get both of them all at once.”
In the past month, the spreading coronavirus has all but evaporated demand for oil as airlines ground planes and consumers seek shelter at home.Meanwhile, Saudi Arabia and Russia are engaged in a price war, which is flooding the market with oil. This one-two punch has caused the price of oil to collapse in a matter of weeks. It’s down about 60% since the beginning of the year, and it has reached lows of close to $20 — which it hasn’t seen since 2002. Even if the two feuding countries reach an agreement, it will take several weeks for demand to begin to recover, Doherty said. This will undoubtedly reshape the glob
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