With the arrival of the second wave of the Coronavirus epidemic, the trend of rising oil prices is likely to stop. The world economy could be under threat again.
The increase in new cases of Coronavirus in Beijing last week has prompted immediate government action. Many stores and shopping malls have been closed again.
The Coronavirus cases are on the rise in the United States as well. In March and April, New York was the epicenter of the disease. This time, the outbreak headed to the south. On Sunday, the country reported around 26,000 new cases of Coronavirus, the highest level in a month.
According to health officials, the second wave of Covid-19 has begun. The virus has never been destroyed, but its recurrence has led to the collapse of financial markets in recent days.
Oil prices have dropped 10% in less than a week. Concerns about the beginning of the second wave of the Coronavirus epidemic have affected commercial markets worldwide, from Beijing to Florida.
The International Monetary Fund is likely to lower its forecast for global economic growth. In April, the fund predicted that global GDP would fall by 3% this year. Crystalina Georgieva, the head of the International Monetary Fund, stated that the coronavirus epidemic remains like a domino game.
China’s industrial production rose by only 4.4 % in May from a year earlier. Thus, concerns about economic prosperity have increased.
Oil prices are likely to drop more
Meanwhile, oil, which has been added to the world’s storage resources over the past few months, has become a matter of concern. China alone added 440 million barrels to its reserves in the first six months of this year. China’s rising reserves pushed oil prices and created a source of demand during the rise of the corona crisis and the recession. However, it is unclear whether this trend will continue.
What worries the oil market is the excessive rise in prices in recent weeks. There seems to be too much optimism in the market. The Commerce Bank stressed that oil markets focused only on the positive news of declining US shale production and the OPEC + contract to reduce production, and ignored warning signs. The Coronavirus never disappeared, and it is now spreading again.
The investment bank added that the outlook for the oil market is blurred by limited economic information and concerns about the second wave of Coronavirus. Demand outside China remains low. That’s why oil prices are likely to fall further in the short term.
The British Petroleum Company has predicted low oil prices for decades to come, the BBC reported.
British Petroleum expects oil prices to fall 30% by 2050 and Brent crude to decrease to $55 a barrel.
As a result, the company is lowering its capital value by $13 billion to $17.5 billion.
Oil prices have seen a three-time decrease since the coronavirus outbreak.
The British Petroleum said it expected the consequences of the Corona crisis to accelerate the transition to low-carbon energy. The economies around the world seek to build structures that are more resilient in the future.
