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Crude Dependent Sectors Likely to Gain from Significant Drop in Crude Oil Prices

  • 09-Mar-2020 12:00 PM
  • Journalist: Peter Schmidt

Oil prices plunged by 30 per cent after Organization of Petroleum Exporting Countries (OPEC) failed to establish a deal with its allies over the production cut of crude oil. The resentment made Saudi Arabia and Russia, two great oil producing nations, to operate independently and free from any agreements resulting in an impending price war. Saudi Arabia to attain competitive gain over other producers, dropped its prices to a significant low with an anticipated increase in production to 10 million barrels from 9.7 million barrel per day. On the other hand, Russia has also instructed its major oil producing companies to ramp up the production. This dramatic resentment is expected to flood the global market with crude oil hence, leading to a further increase in the spread between crude oil and its downstream products. The extended spread is likely to enhance the profit margins of downstream companies utilizing naphtha and other mid-stream products of crude oil.

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