Oil in 2020

Al-Sharq Al-Awsat, London, December 29

The year 2020 was a unique year both economically and socially. More than 1.5 million people around the world died due to COVID-19. In the past year, the world went through repeated closures, lockdowns and quarantines without a clear sense of when the pandemic will be over. Many industries crashed. Others barely survived. Demand for oil fell to a record low of 9.8 million barrels per day, forcing OPEC countries to reduce production by 7.7 million barrels. During the beginning of the pandemic, oil prices fell to minimal levels of about $30 a barrel, compared to $70-$80 before the pandemic.  With the widespread rollout of COVID-19 vaccinations and the gradual return to international travel, the average price of oil is expected to slightly rise to about $45 a barrel in 2021, compared to an average of $41 in 2020. The oil-producing countries faced two important challenges during the year 2020. The first is the decline in both demand and prices during the year. The second is the continuing challenge to the oil industry, with the rapid shift toward alternative energy sources. There are also other challenges that are playing an important role in shaping demand, price and supply of oil. First, there is the growing economic role of China, and the trade disputes that have reduced trade and investment exchange between Washington and Beijing during President Trump’s tenure. Second, there is Joe Biden’s ability to make fundamental changes to his country’s environmental policy, and to restore the United States’ participation in the Paris climate agreement. Biden has made several commitments to change on the climate front, and appointed important political figures to tackle this task. But implementing a policy to curb global warming will face domestic opposition in the United States. –Walid Khadduri (translated by Asaf Zilberfarb)