US crude oil prices fell below $20 a barrel on Monday, close to their lowest level in 18 years, as traders bet production would have to shut to prevent a glut in the markets. The situation is particularly bleak for high-cost wells in the world’s largest producer: the US. We talk to Ellen Wald, from the Atlantic Council, in Florida, and Tom Adshead, a director of Macro Advisory in Moscow.
Meanwhile, the Coronavirus outbreak has caused a rather startling change in fish consumption in Kenya. Instead of importing stocks from China, Kenyans have refound their taste for local catches, boosting incomes within the industry. And what do you do when you’re in lockdown?
BBC: What’s your thought on this, especially Houston is the self-proclaimed oil capital of the world?
TN: It’s had a huge impact. I live in North of Houston where Exxon Mobil is based, were the largest oil producer in the world is 5 minutes from my house. So it’s having a huge impact directly to our neighborhood and of course, Houston more broadly.
BBC: How many jobs in this industry? Can Houston diversify?
TN: Houston has done a lot of work diversifying over the last 30 years. Medicine, we have the largest health center in the US with the Houston Medical Center. The port of Houston is one of the largest ports in the US. There is quite a lot of financial services here. However, energy is still a large contributor to Houston. A crude price under $20 is really devastating for Houston and 10 of thousands of jobs have already been lost.
BBC: Is it viable at that sort of prices?
TN: I don’t think it’s viable for anybody. It’s not like the Saudi VS Russia VS Texas issue. It’s not viable fiscally for Iran, Russia, for anyone to pull oil from the ground at these prices. They can’t run their governments at these prices. It’s not viable commercially for companies in Texas to pull oil from the ground at these prices. These prices are not helping anybody. It really is the demand shock of coronavirus and the Saudi-Russia feud. If we didn’t have the demand shock, we wouldn’t be here. We’ll probably be in the 40s and the Saudi plan would be effective.
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