Page 4 - AsianOil Week 01 2021

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A long, strange

year: 2020 in review

The last year has left oil markets battered,
bruised and struggling to pick up the pieces

COMMENTARY WORLD oil markets have never quite recovered Russia and Saudi Arabia to bring much more oil
all of the ground they lost between mid-2014 and to market in the hope of gaining more market
early 2016, when prices for Brent crude and West share. (It also led other members of the group to
WHAT: Texas Intermediate (WTI) plummeted from follow suit.) This rapid increase in supply took
Panel no indent levels above $110 per barrel to less than $30 per place at a time when very little surplus crude
barrel. But in 2020, traders discovered that there could be consigned to inventory, as most storage
WHY: was more room for these two benchmarks to fall. facilities were almost completely full. As a result,
Panel no indent On April 20, WTI prices hit unprecedented prices plummeted even more than they might
lows, sinking below zero for the first time in his- have done otherwise – and the rest of the year
WHAT NEXT: tory. (Brent, by contrast, hit a 19-year low slightly was taken up by attempts to repair the damage.
Panel no indent below $20 per barrel on the same day.) Prices did The clean-up campaign is not over. Neverthe-
not stay at these levels for long, but they have not less, NewsBase’s editors are marking the start of Falling energy
regained all their strength either. As of the begin- 2021 with a review of how each of the regions
ning of 2021, both were trading near $50 per bar- covered by our organisation was affected by the prices and
rel, and some market observers were speculating events of the past 12 months. weakening
about the possibility of further declines, owing to
disagreements over OPEC+ production quotas Africa: Delays and disruption demand caused
and new lockdowns to combat the ongoing coro- Undoubtedly, Africa’s oil and gas sector has suf-
navirus (COVID-19) pandemic. fered over the last year. export earnings
This speculation is hardly misplaced, given Falling energy prices and weakening demand
that OPEC+ production quotas and COVID-19 caused export earnings to sink, and the decline to sink
were the main reasons why 2020 wreaked such imposed significant hardships on major produc-
havoc on the energy sector. The pandemic (and ers such as Nigeria and Angola, which are heavily
the public health measures taken to combat it) dependent on oil export revenues. They also left
caused oil and gas consumption levels to plum- some of these producers with large volumes of
met astonishingly quickly in the first half of the crude and LNG that they simply could not sell –
year, even as they upended predictions about and could not put into storage either, since they
future demand. lacked the facilities to do so.
At the same time, the lapse of the OPEC+ Nigeria, for example, found itself stuck
production agreement at the end of March led repeatedly during the spring with dozens of

P4 www. NEWSBASE .com Week 01 07•January•2021