Page 8 - FSUOGM Week 01 2021

FSUOGM COMMENTARY FSUOGM

A long, strange year:

2020 in review

NewsBase’s editors are marking the start of 2021 with a review of how each of the regions

covered by our organisation was affected by the events of the past 12 months

GLOBAL WORLD oil markets have never quite recovered At the same time, the lapse of the OPEC+
all of the ground they lost between mid-2014 and production agreement at the end of March led
early 2016, when prices for Brent crude and West Russia and Saudi Arabia to bring much more oil
Texas Intermediate (WTI) plummeted from to market in the hope of gaining more market
levels above $110 per barrel to less than $30 per share. (It also led other members of the group to
barrel. But in 2020, traders discovered that there follow suit.) This rapid increase in supply took
was more room for these two benchmarks to fall. place at a time when very little surplus crude
On April 20, WTI prices hit unprecedented could be consigned to inventory, as most storage
lows, sinking below zero for the first time in his- facilities were almost completely full. As a result,
tory. (Brent, by contrast, hit a 19-year low slightly prices plummeted even more than they might
below $20 per barrel on the same day.) Prices did have done otherwise – and the rest of the year
not stay at these levels for long, but they have not was taken up by attempts to repair the damage.
regained all their strength either. As of the begin- The clean-up campaign is not over. Neverthe-
ning of 2021, both were trading near $50 per bar- less, NewsBase’s editors are marking the start of
rel, and some market observers were speculating 2021 with a review of how each of the regions
about the possibility of further declines, owing to covered by our organisation was affected by the
disagreements over OPEC+ production quotas events of the past 12 months.
and new lockdowns to combat the ongoing coro-
navirus (COVID-19) pandemic. Africa: Delays and disruption
This speculation is hardly misplaced, given Undoubtedly, Africa’s oil and gas sector has suf-
that OPEC+ production quotas and COVID-19 fered over the last year.
were the main reasons why 2020 wreaked such Falling energy prices and weakening demand
havoc on the energy sector. The pandemic (and caused export earnings to sink, and the decline
the public health measures taken to combat it) imposed significant hardships on major produc-
caused oil and gas consumption levels to plum- ers such as Nigeria and Angola, which are heavily
met astonishingly quickly in the first half of the dependent on oil export revenues. They also left
year, even as they upended predictions about some of these producers with large volumes of
future demand. crude and LNG that they simply could not sell

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