Oil Price Collapse Directly Linked To COVID-19 Response Measures - Iraqi Oil Ministry

BAGHDAD (Pakistan Point News / Sputnik - 21st April, 2020) The historical collapse in oil prices in the United States is directly linked to the degree of governments' control over the spread of the coronavirus and restrictions imposed on people's movements, and once the restrictions are relaxed, prices will return to normal levels, Iraqi Oil Ministry spokesman Asem Jihad told Sputnik on Monday.

Earlier in the day, WTI crude oil futures for May delivery fell to negative values for the first time in history, reaching minus $40.32 per barrel, as traders tried to get rid of their positions to avoid physical delivery amid near-full storages. June futures for WTI fell by 16.9 percent to $20.8 per barrel.

"The most important factors that caused the collapse in oil prices are the restriction on passenger and industrial flights. The lack of fuel consumption is the reason why supply outperforms demand," Jihad explained.

The fall in prices is a natural consequence of the lack of buyers, he said.

"This situation is natural in view of the fact that it is not possible to control the spread of the coronavirus, this led to stagnation in the crude oil market and overfilled storages, as there is an oversupply," the spokesman said.

The key to resolving this situation is controlling over the spread of the coronavirus and gradually removing restrictions on movement, he said.

"As we return to the natural pace of movement, this will have a positive effect on oil consumption and prices. In the meantime, there will be further losses in markets," Jihad predicted.