The pandemic has led to a reduction in demand for crude globally
India has imported a record amount of cheap Liquefied Natural Gas (LNG) in February amid the global panic due to the novel coronavirus outbreak (COVID-19), according to a report by research organisation, BloombergNEF (BNEF).
As China struggled with COVID-19, economic activities slowed down in the country, leading to a 34 per cent fall in its LNG imports, according to the BNEF report.
Using this as an opportunity, India procured cheap cargoes and ended up with a record 42 deliveries for the month, the highest level seen since the country began imports, the report added.
India also took some Australian cargoes originally destined for China, the BNEF Global LNG Monthly report for March 2020, said.
Global LNG imports totalled 31.4 million tonnes in February, down 6.2 per cent from January, but 18 per cent up from last year, the report said.
In China, 80,796 people have been infected from the deadly virus so far, while 3,100 people have died. Globally, the virus has infected 124,968 people across 122 countries.
As many as 4,585 deaths have taken place. As a result, the World Health Organization (WHO) had to declare a pandemic on March 11, 2020.
Though the BNEF report has predicted a revival in Chinese demand, other market indicators told a different story. It remains to be seen whether India has any concrete plan to use this opportunity in its favour.
COVID-19 has resulted in the slowdown of economic activities and consequently, a reduction in the demand for crude oil, globally. To deal with emerging challenges, the Organisation of the Petroleum Exporting Countries (OPEC) decided to cut production.
The 14-member OPEC is an international organisation and influences global oil prices. It decides ion whether to increase or decrease the production of oil, based on market situations. Collectively, it controls around 80 per cent of the world’s total oil reserves.
Though major oil producers such as the United States and Russia are not OPEC members, Russia has been closely aligned with the body since 2017. This time though, Russia refused to follow OPEC’s plan, resulting in an oil war-like situation.
Saudi Arabia, another big oil producer, has announced that it will cut prices of crude and also increase production. Saudi Arabia, Russia and the US together contribute more than 30 per cent of the global oil supply and exports while Saudi Arabia and Russia have a significant control on the market.
The kingdom has reportedly announced ramping up production beyond 10 million barrels per day (bpd) for the month of April, with a possibility to touch 11 million bpd, Refinitiv, a research group has said. Russia has also decided to increase production.
This could lead to other OPEC producers also following suit.
We are a voice to you; you have been a support to us. Together we build journalism that is independent, credible and fearless. You can further help us by making a donation. This will mean a lot for our ability to bring you news, perspectives and analysis from the ground so that we can make change together.
Comments are moderated and will be published only after the site moderator’s approval. Please use a genuine email ID and provide your name. Selected comments may also be used in the ‘Letters’ section of the Down To Earth print edition.