World crude oil production. This analysis is not projected to be based on conventions and hypothetical assumptions, but denoting to facts and statistics and the essential inclinations driving the marketplace. The everyday variations of oil values generate a lot of emotions for some monetary agents. It recaps us that the historical crude oil worth is fluctuating around $20 to $30 per drum. Consequently, the existing situation is carrying us back to the past regular crude oil worth. The graph below figure: 1 represents the Biosphere crude oil creation within the period 1960 to 2013, includes nations in the hemisphere such as North America with 20 mil.
drums per day (mbpd) in the early stage and fluctuations throughout this period leading to an increase to 70 (mbpd) in the latter year, Latin America with 10 (mbpd) then fluctuations and an increase to 48 (mbpd).
Western Europe joined in early 2000’s with 30 (mbpd) and then had a decrease to 20 (mbpd) with and rise thereafter back to 30 (mbpd), Eastern Europe and Eurasia started with 10 (mbpd) and after fluctuations it increase to 40 (mbpd), in the Middle East 7 (mbpd), and after fluctuations it increased to 30 (mbpd), in Africa it was 0 (mbpd), then increase continuously with 10 (mbpd), and Asia and Pacific 0 (mbpd) increased to 5 (mbpd) in 2013.
Besides, OPEC share commenced with 55 (mbpd), and after fluctuations it ended with 43 percentage shares. Figure 1: World crude oil production from 1960 to 2013. Source: Us Energy Information Administration International Energy, 2020. Besides, the blue curvature represents the OPEC bazaar share over 50 years in the global making, it shows that since the oil price came down to $12 per drum in the 2000s years, OPEC has decided to maintain a minimum of 40% market share to keep regulating the market.
But since 2013, the market has drastically evolved with Russia and USA contesting Saudi Arabia biosphere making leadership and forcing.
The Middle East nations to reduce their production to maintain a drum price above $40 per drum, thus to reduce OPEC market share downward to the limit of 30%, below which this organization considers losing the control of the bazaar. At the default to align strategies amongst OPEC and non-OPEC nations, especially Russia, the Kingdom of Saudi Arabia, well supported by the additional Gulf nations have decided to go optimistic in oil making and aggressive pricing. In addition to boosting capacities by about 4 mil. drums per diurnal in the short term, Saudi Arabia has confirmed to maintain its $100 bil. investment in one field development with the target to come back as close as possible to the 40% market share with the support of the other OPEC countries. Middle-East is the perfect example of a region which has never reduced Oil & Gas and Petrochemical funds in case of depression, but instead which has militarized their countrywide Oil corporations to support the resilience of their local economies and employment.
How has the Coronavirus affected the energy market in general, with relation to demand and supply.? Entwined but discrete The two shockwaves of COVID-19 and oil value failure are intertwined, yet distinct. On the one hand, the demand component of the oil shock is linked to the sharp reduction in oil ingesting stemming from precautionary measures to stop the spread of the virus. This includes lockdowns, which have carried economies everywhere the biosphere to a halt. The assessed 10% decrease in oil consumption from 2019 (about 10mb/d) is the consequence of condensed air and road travel. While the deepness and period of the outbreak shock, inexact, it is probable to be short-lived. Indeed, the sternness of the shock has triggered unparalleled local actions in progressive and emerging nations, and the authoritative of worldwide management to eliminate the virus will hopefully conquer.
The international monetary establishments are critical to the effort of developing countries fighting COVID-19 (which have critical balance of payments or fiscal problems). These organizations (which can offer zero- to low-interest financing and long maturities) are best-equipped to aid MENA and other emerging nations deal with the double shock. The cost of delay, both economic and social, would be great. Once the spread of the virus is stopped, the preventive measures at the root of the economic recession will be rolled back. The speed of that recovery will depend on how swiftly and decisively administrations take measures to mitigate the economic and financial dislocations from the health catastrophe. But the supply component of the oil shock is likely to be persistent and drive oil prices lower for longer. The two shocks differ in their duration, but also their likely potential penalties and associated risks of inaction.
When assessing the impact of oil values on the global economy, economists typically distinguish amid supply- and demand-driven oil shocks. Demand-driven shocks are related to the evolution of global demand and are not expected to have an independent effect on the global economy. In contrast, the supply-driven oil shocks would normally be expected to give an independent boost to the global economy. There are several reasons why, in this case, they might not. Not least of all, the financial propagation effects of the collapse in oil prices have caused the markets for equities, bonds, and non-oil commodities to tumble.
For MENA countries specifically, lower prices are generally good for oil-importing countries and bad for oil exporters. A simple way to get a sense of the size of the real income effect of an oil price change is to multiply the difference between making and ingesting (net oil export) as a share of GDP by the percentage point change in the oil price. For example, based on hypothetical hypothesis that oil prices will stay 48% below the 2019 level, Kuwait (where net oil exports account for 43% of GDP) would experience a decline in real income of about 20% of GDP, while importer would experience an increase in real income equivalent to 3% of GDP (Figure 3). Figure 3: Back-of-the-envelope effect of the oil collapse Source: Us Energy Information Administration International Energy, 2020