UCL Institute for Sustainable Resources


Oil: we have entered a new world and there is no way back

23 April 2020

UCL ISR Deputy Director Professor Michael Grubb has written a piece on COVID-19 and the collapse of oil prices.

Crude oil sunset

Coronavirus has just prematurely thrown the world’s most valuable commodity over a cliff towards which it was anyway stumbling this decade. In 2019, oil demand breached 100m barrels a day for the first time: it may well be the last. Covid-19 has already ensured that 2020 demand will be much lower. Some inevitable post-Covid-19 bounce does not mean that oil demand will ever again reach triple figures. A previously unthinkable US-convened semi-cartel with Russia and OPEC could probably cause price spikes, but seems scarcely stable in the long run. The cost of the dramatic and strategically premature price collapse could still be high volatility, particularly if Middle East regimes fall or take to conflict in fiscal desperation. But we have already entered a new world, and there is no way back to the old.

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Photo credit: Zbynek Burival, Unsplash