Economists and analysts are mindful of the effects of lower crude oil prices on the global economy and Oil and Gas sector.

The international benchmark Brent crude futures plummeted 30% to US$31.02 per barrel, its lowest level since Feb 2016 while US West Texas Intermediate crude dropped 27% to US$30 per barrel, also its lowest level since Feb 2016.

Oil prices dropped 30% after OPEC failed to strike a deal with its allies regarding production cuts causing Saudi Arabia to slash its prices as it reportedly gets set to ramp up production, leading to fears of an all-out price war.

Share prices of Bursa Malaysia oil and gas (O&G)-related stocks, including Sapura Energy Bhd fell as world equities took cue from crude oil prices 30% drop regarding production cuts amid the Covid-19 outbreak.

Research house AmInvestment lowered its 2020 crude oil price forecast to US$40–US$45/barrel and 2021 estimates to US$45–US$50/barrel from US$60–US$65/barrel given the rising excess oil capacity that is likely to flood global markets.

Sapura Energy Bhd President and Chief Executive Tan Sri Shahril Shamsuddin in a media report published by a Chinese newspaper last Feb was quoted as saying that although the epidemic outbreak will cause prices of crude oil to go down and impact market sentiment in the oil and gas industry, he is convinced the situation will eventually pass.

He believes the epidemic will be controlled and help stabilise crude oil prices.

Sapura Energy will maintain its operations during the market downturn and operate at a lower cost, and in the same time continue to seize better business opportunities.

Overall, the global oil and gas industry will continue to be challenging this year as the global market is still full of uncertainties. 

Source : Linkedin Azlan Abu Bakar