As the novel coronavirus continues to spread and countries adopt strict quarantine, oil prices dropped due to limited travel.
According to petroleum analyst, Allison Mac, since China, being the second in demand for oil is on lockdown there will be less demand for gasoline. So a decrease in demand would cause the gas price to “trickle down”.
In addition to the coronavirus, a dispute between the Organization of the Petroleum Exporting Countries (OPEC) and Russia has negatively affected the oil prices.
In an interview with global news, Mac said “… then the second thing is that there’s a dispute between two countries, Saudi Arabia and Russia, where they couldn’t meet a resolution about cutting back the production, because if you cut down the production, prices will not plummet as dramatically as it’s been.” It was reported by Global News, the price of oil sank nearly 20 per cent after Russia refused to roll back production in response to falling demand and Saudi Arabia signaled it will ramp up its own output. While low oil prices can translate into cheaper gasoline, they wreak havoc on energy companies and countries that count on petroleum revenue.
