The coronavirus epidemic has plunged the world into a situation never seen before. The oil-producing countries are making such a collapse in demand that they no longer know what to do with their black gold. A crisis meeting is to take place on Thursday to try to find a compromise and stop the fall in prices.
It is a global showdown that begins Thursday: the largest oil producing countries will try to stop the fall in the price of black gold which has unexpected consequences.
Yes, the collapse in demand is commensurate with the shutdown of the economy. Never since the first oil wells were drilled in the mid-nineteenth century - it was in Titusville, Pennsylvania - the world had not faced such a surplus of black gold. And suddenly we do not know what to do with it! We do not know how to store all this crude that comes out of the wells and that we can not stop. This is unprecedented, like many things in this crisis caused by the Covid-19. Today, 90% of the world's storage capacity is full. And the few tanks or warehouses that are still free can be rented out.
We are even storing oil in supertankers.
We stock it everywhere: in oil pipelines that no longer carry oil since there is no longer any demand, in tank wagons, in tankers that stay offshore with their tanks filled to the brim ... Tomorrow, the big ones oil countries will meet by video conference. Objective: to agree to reduce production. Problem: the two big ones, Russia and Saudi Arabia, do not want to be the only ones to make efforts. They want Donald Trump to also commit to a drop in American production. Either he accepts and the prices will go up. Either he refuses and the world will be even more inundated with oil than we will know how to store. Answer: Thursday.