about 4 years ago • 2 mins
OPEC and its “OPEC+” allies – a group of oil-producing countries controlling over half the world’s annual supply and 90% of its reserves – met on Tuesday to discuss making emergency production cuts in response to the dramatic impact of the coronavirus on global oil demand 🌎
The pulmonary proto-pandemic is weighing heavily on both international travel and Chinese economic growth – which in turn has a big impact on oil demand. The price of oil has fallen almost 20% since the coronavirus outbreak began, and OPEC+ is scrambling to contain the fallout. The group has already cut production several times since 2016; it’s now considering extending those cuts, deepening them, or both in a bid to help prop up the oil price and avoid wreaking havoc on its members’ government finances.
British energy giant BP warned on Tuesday that the coronavirus could wipe 40% off growth in global oil demand this year. That’ll likely add even more pressure to the company, which simultaneously reported a 25% drop in its fourth-quarter profit 📉 Lower oil and gas prices have also taken their toll on earnings from BP’s peers in the US and Europe recently – but the company did have some good news to share on Tuesday. It expects to make more cash than expected in 2020 from selling off assets – and is raising its dividend payout to shareholders by 2% as a result.
There was yet more bad news for the gas pumpers on Tuesday as the UK announced plans to ban the sale of all new gasoline, diesel, and hybrid cars by 2035 – five years earlier (and one category wider) than previously planned 🚘 While oil producers are scrambling to deal with the current coronavirus headache, less hydrocarbon-based driving means bigger trouble ahead: road transportation currently accounts for half of oil demand in developed countries.
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