The cost of oil has diminished around the world due to clashing trade agreements and Covid- 19 shortages.

In the past few months the world has greatly reduced  the amount of oil used in their cars, planes, and cruises. This has disrupted the amount of supply and demand that is needed to keep oil prices high.

Large oil producers in major countries such as Russia and Saudi Arabia are unable to halt the pumping of oil to meet the lower demand during the Covid-19 pandemic. Oil is pumped out of the ground but ending this process is difficult and costly. Since production must remain constant, these countries are left with thousands of excess barrels of crude oil which are not being purchased.

CNN reports that the shortage in demand can be linked to the drop in international travel and the use of airplanes as well as the widespread lockdowns in China, which consumes roughly 10 million barrels of oil each day.

Moreover, CNN predicts that these two countries will run out of space to store their excess barrels within the next few months, forcing production to halt entirely. This process could cost billions for these top oil producing countries.

The economic impact of the tanked oil prices is not only felt by the countries who export oil, but it also effects American oil industries who need a high price per barrel in order to operate and make profit.

Large gas station companies are also hit hard; according to the New York Times, “The share prices of large companies like Exxon Mobil, ConocoPhillips and Chevron have nearly halved in recent months, while the stocks of smaller firms with less healthy balance sheets have fallen even more.” This could lead to a wave of bankruptcies as companies will be unable to make profit due to the low prices.

President Trump has been keeping the country updated on the current oil situation through Twitter. On March 9, he wrote “Saudi Arabia and Russia are arguing over the price and flow of oil. That, and the Fake News, is the reason for the market drop!”

The Balance reports that “Oil prices will be $43.30 a barrel for 2020 and $55.36/b in 2021. Four factors affect prices: U.S. shale production, OPEC, the U.S. dollar, and demand. Oil prices will rise above $100/b by 2050”.

They claim that factors such as the rising value of the U.S. dollar and a projected increase of United States oil production in the coming years will work to raise the price of oil again.