Abstract
On April 21st 2020, for the first time in the word's history, the price of oil contracts for May delivery in the US dropped sharply to below 0 USD and stopped at a negative price as of 37.63 USD/barrel. The world oil market really fell into crisis, which had a significant impact on the oil industry of Vietnam. This article focuses on analyzing and clarifying the essence of “negative oil price” as well as the world oil market crisis and its impacts on the petroleum market in Vietnam. The findings indicate that the negative oil price was simply the result of a trading session in futures market, but its nature was the interaction between oil futures market and the physical market characterized by the disequilibrium in short-term. A scenario of low oil price dynamics is analyzed and predicted for the coming time. Thereby, the paper provides recommendations to the oil industry and macro governance of Vietnam in order to appropriate countermeasures in this difficult period.Keyword: Oil price, international oil market dynamics, Vietnam's oil industry and EconomyJEL Classifications: D4, Q31, Q41, Q43. Q48DOI: https://doi.org/10.32479/ijeep.10720
Highlights
Fluctuations of international oil price always attract a special interest from scientists as well as policy makers
On the basis of the theory of fundamental economics, the characteristics of oil futures markets and the interaction between the global oil market and the domestic ones, this paper aims to analyze and clarify the essence of “negative oil price” as well as to evaluate global oil market shock and determine its impacts on the petroleum market in Vietnam as crude oil plays an important role in the economic development of emerging market like Vietnam
From statistic data of actual oil supply, stock, and demand, most experts of oil economics forecasted that some possible high fluctuations caused by season effects, international oil price in 2020 will be stable and fluctuate around the price level of $60-65/bbl
Summary
Fluctuations of international oil price always attract a special interest from scientists as well as policy makers. Competitive strategies of important actors in the international oil market and especially the reduction in global oil demand due to negative effects of the Covid-19 pandemic has made the oil price back to “the price war,” and even oil transactions in the futures market has created a milestone in the global oil scene: a negative oil price. On the basis of the theory of fundamental economics, the characteristics of oil futures markets and the interaction between the global oil market and the domestic ones, this paper aims to analyze and clarify the essence of “negative oil price” as well as to evaluate global oil market shock and determine its impacts on the petroleum market in Vietnam as crude oil plays an important role in the economic development of emerging market like Vietnam. The last part of this paper gives conclusions and recommendations for the Vietnam’s oil industry and macro-policy of government, thereby carrying out appropriate policies during this difficult period
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