Coronavirus & Volatility In The Oil Markets: An Endless Cycle

Coronavirus & Volatility In The Oil Markets: An Endless Cycle

Coronavirus & Volatility In The Oil Markets: An Endless Cycle

Earlier this year, amidst the chaos created by the rampant spread of coronavirus throughout the world, many countries also started to experience financial turmoil, potentially due to strict economic shutdowns. To add insult to injury, April presented a new conundrum for many countries: oil prices plummeted to historic lows, falling into negative territory for the first time in history. This meant that oil producers would actually have to pay buyers and traders to take oil from them, in order to mitigate storage issues. Since then, partly due to agreements reached between larger oil producers such as Russia, OPEC, etc., oil prices are slowly starting to recover.



An interesting corollary to the volatility in this market is its relationship to Covid-19. Though not obvious at first sight, the global pandemic has contributed to volatility in the oil markets, and vice-versa“” creating a self-propagating loop. For one thing, the travel industry worldwide has been severely restricted for the majority of the year thus far, with airlines, cruise ships, and other travel services largely grounded. Furthermore, for nearly 3 months, most countries have gone into domestic lock-downs, entailing less road traffic and travel