Abstract
Oil Price has been a benchmark governing the trade of oil and gas globally. It is fixed by producing countries or countries in a consortium through organizations such as Organization of the Petroleum Exporting Countries (OPEC) or a particular mix of crude oil such as the West Texas Intermediate (WTI) or Brent. The spot price and future prices of crude oil is basically determined by demand and supply, however, some external factors can have great influence on oil price. This research work will be emphasizing on the direct and indirect effects of the COVID-19 pandemic as an external factor other than demand and supply on the benchmarks of oil pricing between 2000 and 2020. Having analyzed the various oil price fluctuation which have been caused by several factors over the years, this research went further to identify those significant factors, weigh them and input them into a model that will generate simulated oil prices of past, present and future benchmarks with relation to demand, supply, production cost and other external factors. This model was also validated using machine learning algorithms and real data of previous yearly average oil price noting the reasons for each spot price. Significant recommendations were made on the use of this model for fixing oil price benchmarks as variables to each benchmark are numerous.
Highlights
Oil pricing has dated back to the commercial oil drills in Pennsylvania, USA in 1959 and a spike owning to about half of the world’s oil [4]
This turnaround of events has had an indirect effect on the Crude Oil price benchmark of the OPEC Basket, West Texas Intermediate (WTI) and Brent leading to a steep drop in the oil price
The COVID-19 pandemic brought about unprecedented disruptions in global supply chains, quick reduction in crude oil price, international travel restrictions and disrupt in the financial market
Summary
Each incident above has affected the oil price in one way or the other as shown in the fluctuation of oil price in Fig. 1, but for the purpose of this work, we will be analyzing the COVID-19 effect on the oil price. Asides the direct impact on oil prices, oil production is threatened as many onshore and especially offshore oilfields have resulted to reducing work capacity or at worse shutting the field for fear of rising COVID-19 cases. The Pandemic has resulted in the shutdown of several economic activities across the world in a bid to curb the fatality inflicted by the spread. This turnaround of events has had an indirect effect on the Crude Oil price benchmark of the OPEC Basket, WTI and Brent leading to a steep drop in the oil price. Efforts are being made to improve the price of crude for the purpose of profit and sustainability as a handful of countries depends on revenue from crude oil
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
