Author: Ing. Daniela Avila, April 04, 2022
Summary
Between 2020 and 2021, the Covid-19 pandemic has represented the greatest impact on the energy industry since the Second World War, with an insurmountable drop in demand and oil prices worldwide.
Content
The energy sector has had to face two main challenges: managing the problems of the health emergency that all sectors face and, simultaneously, dealing with a scenario never seen before, with low production, lower demand, and the need to protect income and manage debt obligations.
However, not everything is negative since CO 2 emissions to the atmosphere have been the lowest in more than 5 decades, and although this point is still a positive factor, it is more negative due to the fact that the oil sector had been in decline for some years due to the overproduction of oil, and combined Due to the pandemic, low demand worldwide, due to low fuel consumption, especially in the transport sector, substantially increased the problem. The abysmal drop in crude oil prices continued throughout 2020, however, the recovery in crude oil prices began in 2021 with the cost of crude oil increasing steadily, although not by a large amount.
The International Energy Agency (IEA) has opened what it calls its COVID-19 Central Hub with the aim of “exploring the impacts of the pandemic on global energy markets, energy resilience and climate change.” In the month of April 2021, he published an article about “the shock that the energy sector is suffering”; which quotes the following: “With 3 billion people around the world under some form of lockdown due to Covid-19, the usual mechanism in which low prices cause an increase in consumption and, at the same time, the growth of reserves can saturate storage capacity, which would further lower prices: of the more than 80 million barrels that are extracted daily in the world, many are doing so below extraction costs. This could mean that, although the better financial producers are able to continue producing at a loss, others will have to cease extraction. In addition, if world refiners stop purchasing crude due to the stoppage of outputs, the problem for producers is accentuated, affecting the entire transport and industrial component supply chain.”
The truth is that both the producing countries and the importing countries of crude oil were forced to look for alternatives that could compensate for the impact caused by the pandemic, and generate an increase in crude oil prices to begin the economic and energy recovery at a global level. .
At the beginning of the year 2022, with greater flexibility regarding Covid-19 and its variants, the return to “Normality” and the usual, added to various conflicts on the world scene, the price of crude oil has had a substantial increase even in against forecasts, which would bring great benefits to the economic recovery of oil-exporting countries in the short and medium term.
Bibliographic references
International Energy Agency (IEA )
About the Author
ing Daniela Avila
Chemical Engineer, with more than 6 years of experience in the area of Industrial Safety, Occupational Health and Hygiene and Environment, in the business sector of oil gas and petrochemicals.
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