With the breakout of Corona disease and its impact on economy of the whole world, the price of petrol guardedly dropped down until few days ago, the price of crude oil plunged below zero.
In the response of some questions relating to reasons behind this price drop and its affects and also the future of petrol market, Dr. Jagar Aziz Harki, expert in petrol and gas, answered as the following:
As it is known, recently the price of a barrel of Texas crude oil (WTI) unexpectedly lowered down to 37.6$ below zero. And this fall of price was caused some contracts that have been signed in May, and the companies faced a problem in storing the oil due to the low demand.
There is a possibility price of WTI may go up if USA starts to fill the strategic oil stores that are estimated to contain 75 million barrels of oil, and if also stops importing Saudi Arabian oil to its refineries.
Related to the difference between the Texas and Brent crude oil, he said:
These two types of oil which we hear about daily, represent to different geographic areas, this is in addition to difference in quality. If we notice from the past, we realize that Brent price has always been higher than Texas oil by a great difference. But now the difference is small, this happened when the U.S. allowed its oil to be exported to other countries.
It is not possible that the Texas oil price be the same with the price of Brent because the fields of oil extracting of Brent, like Northern Sea oil field, Middle East, are more open to world markets, easier, and it can be delivered to customers with lower price.
Dr. Jagar believes that the main reason for this oil crisis is the breakout of the Coronavirus which lowered down the demand of oil by the rate of 30 million barrels per day, and this lead to full stores of oil due to the lockdown of life sectors and low demand for it.
Concerning the future with this issue, he said that it is expected this crisis will remain unstable until the third quarter of 2020, when price of a barrel reach 30$, and 35$ dollars by the end of the year. This can be done if OPEC plus contract is implemented as it is, and countries out of the contract cooperate.
Finally, Dr. Jagar said this unstable petrol market affects the economy of Iraq and Kurdistan, and continues until the oil price reaches up to 45 dollars for each barrel.
Profile: Dr. Jagar Aziz Harki, graduated from university of Heriot-Watt Ia-UK with master’s degree in 2014. He got his PhD degree in the field Enhanced Oil Recovery from Soran University. He is the head of Petroleum Engineering Department-Faculty of Engineering.