COVID-19 and Oil Prices

Abstract

As demonic panic continues to grip the world over the outbreak of COVID19, There is plenty of bearish sentiment hanging over the markets. The economies of most sub-Saharan African countries who for the past three years have been under the IMF economic partnership program may have to develop extra muscles to face the continues drop in commodity prices most especially crude oil. The continuous spread of COVID-19 seems to be the major external economic compass on which all a sundry rely for the market orientation. Oil prices have plummeted as the Coronavirus has intensified across much of Europe and North America. The Energy Information Agency (EIA) has revised down its global oil demand forecast, which suggests that major importers such as China as well as European countries will reduce demand for oil. The latter has followed the trend of industrial production, which has slowed as manufacturing of waxes, perfumes, dyes, shaving creams, shampoos and conditioners that rely on refined oil have been disrupted by the virus. As such, Brent and WTI both fell by 24.59% and 30% to $31.13 and $30 per barrel respectively on Monday, March 9th. Not only has the virus halted manufacturing supply chains in China, but it has also exacerbated the global cyclical slowdown, with both Euro Area and German industrial production plummeting in recent months.