The price of oil is collapsing, so much so that we wonder how to store production. As the columnist Nicolas Barré says, on Tuesday morning, the producers are faced with a paradoxical solution in which they go as far as paying buyers to get rid of it.
This is the consequence of a stationary economic planet: the price of oil collapses to the point that we no longer even know how to store production.
Yes, because shutting down an oil well is a little more complicated than turning off a tap. Even if prices plummet due to lack of demand, producers continue to pump. At less than 20 dollars a barrel, the current price, some producers lose money compared to the cost of extraction. But they prefer to sell their black gold at a loss rather than stop wells. Because it is a complex operation on the technical level and above all it is expensive then to restart a well that has been stopped. So what's going on? We continue to pump and as demand collapses, we store.
But you can't store indefinitely!
No. Global storage capacity will soon be saturated. To tell you how the world is going on its head: it is expected that some producers, not to have to bear the cost of stopping a well, pay buyers to get rid of them. their oil surplus. The price of a barrel would thus become negative!
In the meantime, this situation is dramatic for many producers. A country like Algeria, for example, sees its oil revenues plummet. Russia and Saudi Arabia suffer a plunge in their foreign exchange earnings. And the United States expects chain bankruptcies of shale oil producers. This crisis is simply unprecedented.