Islamabad: In an unprecedented turn of events, the price of crude oil in the United States (US) has turned negative due to dried up demand in the wake of the ongoing COVID-19 pandemic, according to news sources. The US oil market crashed after registering a decrease of 107% with oil prices faring at USD 0.5 – their lowest recorded rate in the last four decades.
The
negative oil prices are causing oil producers, globally, to pay buyers to take
up the commodity due to stark storage capacity shortages. In an attempt to
address the problem, oil companies have resorted to renting tankers to house
their surplus crude reserves. As per sources, the US benchmark West Texas
Intermediate (WTI) for the May contract ended up trading at -$37.63 a barrel on
Tuesday.
Corresponding with the domestic shock, the price of US-based crude oil performed only modestly better in the Asian markets. Brent oil prices, as such, have dropped to the price levels recorded in 2002 after undergoing a 10% decrease – with the new price figure faring at USD 24.53 per barrel. In the last 24 hours, the prices of oil fell by USD 3 per barrel.
Minister of Foreign Affairs Shah Mehmood Qureshi,
while commenting on the situation, said that the drop in oil prices ‘is
shocking’, but that ‘it would translate into reduced oil prices in Pakistan.
According to a reported estimate, a price decrease of as much as PKR 24 per
litre is expected in Pakistan.
What is the difference between WTI and Brent Oil?
While
Brent crude oil is extracted from the North Sea, WTI is attained from US-based
oil mines located in the states of North Dakota, Louisiana and Texas. WTI has a
lower sulphur content than Brent which makes it lighter of the two – making for
its ‘sweeter’ colloquialism.
The Organisation of Petroleum
Exporting Countries (OPEC) use the Brent oil price as the international
benchmark for designating crude oil rates, while the WTI crude price forms the
benchmark for American oil prices.
Hazafa reveres the art of writing and has been turned into a property enthusiast by profession. Her daily survival kit includes; tea, coffee, keyboard and paperbacks.
