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Incredible as it may seem, this was the market index of West Texas Intermediate (WTI), a US brand of crude oil, on Monday. This is the first time in the world that oil prices have fallen below zero. However, after this, the oil market turned around a bit. But experts expect the oil market to hover around 30 ারে a barrel year-round. The main consideration is how much Bangladesh can benefit in this situation. Bangladesh has already begun to reap the benefits of lower prices. Until last Wednesday, crude oil was selling at ২০ 20 to থেকে 21 per barrel.
According to the New York Times, the world’s largest oil storage capacity is 800 million barrels. 80 percent of this stock has already been completed. The rest of the space will be full of purchased oil in the next two months.
The United States has the highest fuel consumption in the world. The country has 75 percent of oil reserves. If the current situation continues, all US oil deposits. USA They will be filled next May.
Brazil is the largest oil market in South America. There is no place to store oil in Brazil. Caribbean countries also have no place to store oil. The situation is similar in South Africa, another large African economy. There is also no place in Nigeria and Angola.
Oil prices are falling
The daily consumption of 29 million barrels of oil has decreased since April this year. The world has been paralyzed by the coronavirus. As a result, the use of oil has been greatly reduced as factories, vehicles, and planes around the world have closed. Last year, crude oil averaged ড 84 per barrel. And this April has become free. Of course, prices have increased from there.
Efforts are being made around the world to increase oil prices. OPEC countries have jointly stopped extracting 100 million barrels (100 million barrels) of oil per day. The United States has announced that it will reduce its oil production. Even then, the drop in oil prices is not going to stop. There is a surplus of around 20 million barrels of oil in the world every day, which has no use or market.
The Texas Railroad Commission, the United States’ oil regulator, recently ordered a 20 percent cut in oil production. Scott Sheffield, executive director of Natural Resources, told the New York Times that at least 70 percent of oil companies would go bankrupt if they were ২০ 20 a barrel. Two and a half lakh people will lose their jobs. And if it is at 30, many companies will be in crisis, but the sector will survive.
In 2010, Brent barrels were sold for an average of approximately ড 100 a year. Basically, the price of oil has been falling since 2014. However, it never decreased to the current situation. The price of oil per barrel was .04 36.04 in 2015, ৭ 53.62 in 2016, ৪ 60.42 in 2016, 45.41 in 2016 and 61.08 in 2019.
No one has seen the current situation before. This was not the case even after the fragile world economies after World War II. At the end of World War II, in February 1948, the price of oil was .5 16.5 per barrel. The oil market is closely related to international politics, wars in a limited number of countries, world recessions and geopolitics. But experts had no idea that the oil market could have a relationship with a virus.
Will oil prices remain the same?
From United States President Donald Trump to the world’s most influential banks and research institutes, there is no end to speculation about where oil prices will go. The US Energy Information Administration. USA (EIA) estimates that oil prices could average ড 23 in the first four months of this year, or ৩০ 30 in the middle of the year. According to the company, the average price of oil will remain at দাঁ 34 this year. And like the company, the price of oil will not rise too soon. Next year, oil prices will rise to an average of ৬ 46 a year. But last year the average price of oil was ড 74.
Although the coronavirus is one of the reasons behind the fall in oil prices, US policy has also played a role in the fall in oil prices. In 1948, the United States enacted a law that prohibits the production and export of oil. The country lifted the ban in 2016. As a result, the rate at which the country has begun to extract oil has exceeded that of Saudi Arabia and Russia. While Saudi Arabia produces 12.4 million barrels of oil per day and Russia 11.4 million barrels per day, the United States produces 12.6 million barrels. This increase in production is one of the reasons for the collapse of the oil market.
Additionally, the value of the US dollar has increased since 2013. This growth rate is 23 percent higher than the previous year. Almost every country in the world sells oil in dollars. So oil prices have dropped 23 percent.
Oil floating in the sea
The demand for oil tankers has increased. It has become difficult to be empty right now. Because they are waiting for oil to be released in any country. But there is no place for redemption.
However, floating stock boats are available for rent. In that case, a barrel of oil would cost around মাস 5.40 to store for six months. That means that half the cost of buying oil now would be rent if you want to accumulate oil. Many also think it is a great profit.
According to Reuters, there are 60 super tankers worldwide, each of which can store 16 million barrels of oil. 25 to 40 percent of the oil in these tankers has been stored. These tankers are floating in the seas of Singapore and the United States. Oil is sold in both places.
There are two oil markets in the world: Singapore and the United States. Bangladesh buys oil from Singapore. Oil prices in the region are determined by Platts Magazine, a Singapore-based money trading magazine. The state-owned company Bangladesh Petroleum Corporation (BPC) purchases oil in Bangladesh in two ways: through GTZ (Government to Government) and international tenders. Of these, crude oil is purchased in two countries on a GTZ basis. They are Saudi Arabia and Abu Dhabi. The country buys 1.5 million tons of crude oil, all on a GTZ basis. Refined oil is purchased on a GTZ basis from eight companies in seven countries. Oil is purchased twice a year through international tenders.
However, regardless of the method used to buy oil in GTZ or tender, the price of oil remains the same, only the premium is negotiated. For example, the price of a barrel of oil is set two days before the day the oil is loaded on the ship for BPC, the price of that day and the price of the next two days, which is published in the magazine ‘Plats ‘based in Singapore.
If the ship begins loading for PCBs on April 20, the price of oil (purchased through GTZ or tender) will be determined by the five-day average oil price published in Parcelas on days 18, 19, 20, 21 and April 22. When oil is purchased through GTZ and tenders, trading is done at a premium. The premium is a series of problems that include shipping, various international taxes, VAT, insurance.
Bangladesh is currently purchasing 1.7 million tons of oil through Vittal and UNIPEC tenders. They were ordered to buy oil in December last year, when the price of oil was ৬ 74 per barrel. BPC will now obtain oil at the current market price due to falling oil prices. However, the premium of ২ 2.33, which was received by the two companies as the highest bidder, will be fixed.
BPC buys around 50 to 55 lakh tons of oil annually. Of this, around 1.5 million tonnes comes from Eastern Refinery Limited (ERL), owned by BPC, the country’s only oil refinery. It imports crude or crude oil, refines ERL, and supplies diesel and other oils. BPC imports refined oil for the rest of the demand. BPC has the capacity to store fuel oil for 60 days throughout the country. 21,000-ton tankers are being built in Parbatipur to increase storage. Work is underway on a project to bring oil directly from the ship to the pipeline at Cox’s Bazar. When this is done, 90,000 tons of oil can be stored. In addition, a project called ERL Unit-2 has been started, which, if completed, will be able to refine 3 million more crude oil with the first ERL unit, which will increase the amount of reserves.
These are projects under construction. But right now, BPC President Shamsur Rahman was asked how many opportunities Bangladesh can take advantage of as a result of falling oil prices in the international market. At first glance, he said: ‘At this time we have taken several initiatives to solve the problem of stocks. The first of these initiatives is to hire private oil tankers. We have already agreed to put oil on a United Group tanker, which will contain 60,000 tons of diesel. Therefore, there are many more private entrepreneurs whose tankers can be rented to increase oil reserves soon. In addition to those lighter ships, we are talking about hiring such ships. The ships will float in the sea with oil for us.
Samsur Rahman said that BPC is making a profit now. If the government does not reduce the price of oil, then BPC will have many benefits. BPC has been buying oil at higher prices and selling it at lower prices since independence. For this, the government finance department will obtain billions of rupees from the organization. However, in recent years, BPC has seen gains due to lower oil prices. If oil reserves are increased, it can be exploited if prices fall on the international market. It also plays an important role in fuel safety.
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