Oil prices have significantly dropped again after another trade spat between the United States (US) and China.
Dropping Oil Prices
The pandemic is still on-going. It has already affected various countries, their economies, and businesses around the world.
Various countries though are beginning to “recover’. Or at least they think they are. Some countries are continuing to enforce their community quarantines. Others are loosening restrictions. There are some that think that the pandemic’s end is just beyond the horizon.
Whatever may happen, the truth is that the world has been changed by the pandemic. Many things have been affected and things won’t be the same, even after the pandemic is solved.
Oil is one thing that has been majorly affected. Prices have already dropped drastically in the past few months. At the start of this week, the prices dropped again.
Brent crude decreased by 2.2% while West Texas Intermediate (WTI) fell by 7.1%.
Experts had expected the loosening of restrictions to allow for the global oil demand to recover. However, the oil that has been kept in storage facilities for months will still be felt by the market.
Goldman Sachs though is quite hopeful about the recovery of oil prices next year. This is partly due to the low production of crude oil and the increase of oil demand.
The Wall Street bank had also raised their 2021 forecast. For Brent, they have it at $55.63 per barrel. For WTI, they forecast it at $51.38 a barrel.
This drop was due to a fresh spat between the US and China.
The trade wars between US and China have been going on for several months. Prior to the pandemic, both countries were progressing in their trade discussions. However, a new issue has brought forward disagreements.
These two powerhouse countries have been arguing about the origin of the Coronavirus.
Tensions were already high when US President Donald Trump threatened to impose more tariffs on China. Then, US Secretary of State Mike Pompeo added more fuel to the fire. He said that there is a large amount of evidence showing that the Coronavirus started in a Chinese laboratory.
A recent report was released by Homeland Security. In the report, it said that China was concealing how severe the Coronavirus was. While they were concealing it, they were also amassing imports and lessened exports.
The decrease of exports was most likely due to China saving their medical supplies for the upcoming pandemic.