In-Depth Analysis on International Oil Market in Post-pandemic Era

Abstract

AbstractAffected by the COVID-19 pandemic, the global oil industry suffered its biggest demand shrinking decline in history in 2020. Oil prices fell to a 16-year low, and oil benchmark WTI once hit an unprecedented negative price. The global oil refining also suffered heavy losses and nearly 100 million tons of refining capacity was closed, and international oil companies fell into large losses. In order to support oil price, OPEC+ led by Saudi Arabia and Russia had cut production on the largest scale in history, and pushed the oil market to a new balance gradually. Since 2021, the global pandemic situation has obviously improved. As the COVID-19 vaccination progress speeds up, not only the economies of major economies rebound, but also the global oil demand has improved significantly. Driven by OPEC+’s production reduction, global petroleum stocks gradually returned to normal levels, and oil price once again reached $70/bbl and even hit $75/bbl for a time. In the medium and long term, the oil market in the post-pandemic era is still facing great challenges. Energy transition, low-carbon economy and the transformation of working style (e.g., work from home) will continue to pose challenges to oil demand. The peak demand may come ahead of schedule, and the pace of low-carbon transition of oil companies will accelerate significantly.KeywordsOil marketOil priceCOVID-19OPEC production cutLow-carbon transition