Why the Oil Market Is in a Freefall Right Now
“Why are oil prices sinking to all new lows?”
Oil prices are sinking to dramatic lows. This has the potential to devastate industries and send the world community into an economic recession. But what exactly is causing this?
Near the beginning of the year, the need to limit travel because of the new coronavirus epidemic had caused flight demand to drop. This led to a decrease in oil demand, prompting OPEC to propose a limit on oil production globally to keep prices stable. However, Russia ignored these rulings and continued its production as normal, hoping to capture a greater share of the market. Saudi Arabia responded by slashing oil prices, selling below market value to ensure its stake in the market. Both countries (at the time of writing) are now proposing an increase in production in an all-out market war. Combined with the fact that oil demand is plummeting due to coronavirus restrictions, and you have a price that is soaring down. This is Why the Oil Market Is in a Freefall Right Now.