Oil production impacted by COVID-19
In 2020, oil demand dropped sharply after the pandemic forced governments around the world to quarantine and restrict movement and travel. In April, Saudi Arabia, and other members of the Organisation of Petroleum Exporting Countries (OPEC) agreed to cut oil production until June. On July 15th, it was agreed that oil production would increase from August to avoid the risk of shortages and maintain price stability amid recovery from the pandemic.
Production cuts, along with rising oil demand in China, have more than doubled oil prices. However, despite the measures taken, the fall in oil prices this year was about 35%. The business and finance news outlet, Bloomberg, has emphasised that this decline was due to an increase in the number of COVID-19 infections in countries such as India and the United States.
Saudi Arabia lowered oil prices, indicating that the world's largest exporter expects fuel demand to fluctuate amid new coronavirus outbreaks around the world..
Saudi Arabia will lose over $ 27 billion in its 2020 budget due to the collapse in oil prices. It was announced by the crown prince of the kingdom, Mohammad bin Salman. State revenues were expected at $ 222 billion, of which about 136.7 billion came from oil revenues. After the collapse in oil prices this year, oil revenues have dropped to about $ 109 billion.
Saudi Arabia's decisions usually set the tone for other oil and gas states in the Middle East, including Iraq and the United Arab Emirates, which are the second and third largest producers in OPEC.
Key terms:
Oil demand
Oil production
Saudi Arabia
OPEC
Middle East
Questions:
How do oil price fluctuations affect the global economy?
Why has the pandemic affected the fluctuations in oil prices so much?
What decision should OPEC take on oil production in 2021?
How will the increased demand for electric cars and environmentally friendly, sustainable ways of living impact oil production and the countries involved?