April 23, 2020
Negative oil prices: Why Asian nations may struggle to take advantage
On 20 April, US oil futures closed in negative territory for the first time, implying that no one was willing to take physical delivery of some barrels of oil. While the unprecedented price moves were exacerbated by technical market operations, including an excessively large exchange traded fund (ETF) and already clogged pipelines in the United States, the real driver is lack of demand due to Covid-19 quarantines and uncertainty about how these trends will change. Longer dated futures still price in a recovery in oil prices later in the year (though less optimistically than global equity markets), but it could be a very painful adjustment to get there.
In a regional context, this raises important questions about how Asian countries might respond to and be affected by this painful adjustment – and why they may be waiting for any major energy investments.
Read the full article in The Interpreter by the Lowy Institute.
More from CNAS
-
Why Stopping Environmental Crime Is a Matter of National Security
Commentary
Last week, the presidency of the Financial Action Task Force, the global intergovernmental standard-setter for combatting illicit financial threats, passed from China to Germa...
By Neil Bhatiya
-
Energy Markets, Geopolitics, and COVID-19
Commentary
On May 14, members of the CNAS Energy, Economics, and Security (EES) program held a Twitter conversation on the impact of COVID-19 on energy markets and geopolitics. EES Progr...
By Sam Dorshimer & Abigail Eineman
-
Covid‑19 and the oil price collapse
Podcast
Rachel Ziemba, Adjunct Senior Fellow at the Center for a New American Security, joins Roland Rajah, the Lowy Institute’s Director of the International Economy Program, an...
By Rachel Ziemba, Roland Rajah & Rodger Shanahan
-
Is U.S. Policy Towards Venezuela at a Turning Point?
Commentary
On March 31, the Trump administration announced a pivot in U.S. policy towards Venezuela. The United States has spent more than a year backing opposition leader Juan Guaido, w...
By John Hughes & Peter Harrell
