Money is what investors think of when they gauge oil in regards to their investment portfolios. The rise or fall of oil prices is an emotional experience no matter how much money an investor is set to gain or lose. As of March 10, 2020, oil has traded below $37 a barrel. Like other-market speculators, you might be wondering if or when petrol prices will rise.
The rise of oil prices is a matter of politics, supply and demand.
OPEC and Its Major Influence
Now the coronavirus isn’t the only influence behind the recent, shocking drop of oil prices.
The Organization of the Petroleum Exporting Countries (OPEC), which, among others, include Saudi Arabia, Angola, Iraq and the UAE, is taking a stand against the oil production of Russia and the United States. A standoff against the USA seems unnecessary until you factor in that the United States is now the largest-global producer of petroleum.
The 15-member countries of OPEC have set lower prices as a way of “fighting” the U.S.-Russian threat. If Russia and the USA don’t stop producing oil, lower prices, which means little to no profits, might influence them to slow down how much they produce. It’s a coincidence that 2020’s oil-price drop aligned with the spread of COVID-19—“the coronavirus.”
There are two things we know with one detail undecided: 2020’s controversy and pandemic will keep prices down, and though companies can’t stay at low prices indefinitely, no one has sights on when petrol’s prices will rise again.
As Oil Companies Operate Below Their Margin of Cost
Market analysts are confident that oil prices will surge up again.
Oil analysts see future-price rises because oil companies have to fund their drilling, barreling and distribution. Major, 2020-oil producers need a price of at-least-$40 per barrel to operate on. Oil countries aren’t gambling entirely on the change of heart in Russian-American oil production, however. Today’s OPEC is competing against technology.
Unlike the pandemic of 1918, modern countries have the means to mass quarantine their lands. Wireless messaging is informing people of the dangers in driving. If OPEC raises prices now, everyone might be too quarantined to buy gas.