Introduction
2020 was a year like no other. It had its share of good and bad news, but one of the biggest surprises of the year was in the world of oil. At the beginning of 2020, the price of oil per barrel was a relatively stable $65 dollars. But by the end of the year, the price of oil per barrel had plummeted to less than $20 dollars. In this article, we’ll take a closer look at the factors that contributed to this surprise drop in oil prices, and what it could mean for the future of the industry.
The Coronavirus Pandemic
The first and foremost factor that led to the drop in oil prices was the global Coronavirus pandemic. As countries around the world went into lockdown, the demand for oil suddenly plummeted. With fewer people driving, flying, and using oil-derived products, the demand for oil dropped sharply. This, in turn, caused the price of oil to drop as well.
The Oil Price War Between Saudi Arabia and Russia
Another major factor that contributed to the drop in oil prices was the oil price war between Saudi Arabia and Russia. In early March, Saudi Arabia announced that it would increase its oil production, which would lower the price of oil. This announcement sent shockwaves through the oil industry, as it was expected to cause an even further drop in oil prices. In response, Russia also announced that it would increase its oil production, leading to an even greater drop in oil prices.
The Impact of High Oil Prices
The drop in oil prices had a major impact on the global economy. With oil prices so low, many oil-producing countries found themselves in dire financial straits. This, in turn, had a major impact on the global economy, as oil-producing countries had to cut back on their spending. This, in turn, had a ripple effect on the global economy, as countries that relied heavily on oil revenue found themselves in a weakened state.
The Impact of Low Oil Prices
The drop in oil prices also had an upside for some countries. For example, countries that rely heavily on imported oil found themselves in a much better position, as they were able to purchase oil at a much lower price. This, in turn, helped to boost their economies, as they had more money to spend on other areas of their economies.
Future Outlook for Oil Prices
It is difficult to predict what will happen to oil prices in the future. However, it is likely that prices will remain low for the foreseeable future, as the effects of the pandemic are still being felt. Additionally, the oil price war between Saudi Arabia and Russia is still ongoing, and it is unclear how this will affect prices in the future. It is also possible that oil prices could rise again as the global economy recovers.
Conclusion
Oil prices per barrel in 2020 were an unexpected surprise. The combination of the global Coronavirus pandemic and the oil price war between Saudi Arabia and Russia led to a drastic drop in oil prices. This had a major impact on the global economy, as oil-producing countries found themselves in a weakened state. On the flip side, countries that rely heavily on imported oil benefited from the low prices. Looking ahead, it is difficult to predict what will happen to oil prices in the future, but it is likely that prices will remain low for the foreseeable future.
