China, the epicenter of Coronavirus is the second largest oil consumer around the world was under lockdown and it has badly affected the big producer of oil and gas. Stock markets gone down, in which oil and gas industry both in larger and smaller countries is badly affected.
Basic Economic concept:
Like all other free markets, oil market also work on ‘demand and supply’ rule. As, price of anything in free market depends upon this rule. If, the demand of the something is more while the supply is less its price will rise.
Effects on Oil and Gas:
Following are the major effects that entire world is facing and can be face in future,
- Loss of Jobs: A large number of people are associated with oil and gas production units. Due to the low demand and less consumption of oil and gas, many companies of the world are terminating their workers because they are not in position to endure the loss anymore as they are already facing a great economic loss as the international demand is low.
- Oil Price War: Due to the less consumption of oil the big exporters of oil like Saudi Arabia and its alliance, Russia and America are facing great depression. There is tug of war between them. Neither of them is ready to decrease the production of oil and gas nor showing their willingness to close their production units. So, this condition will affect the relationship between countries. This would be worse as pandemic overs.
- Effect on Other Industries: Many other industries like textile industry and power sector that are directly associated with oil and gas will bear a huge loss because the oil prices are low and the price of their products will be decrease with it. It will cause the closing of small industries and reducing the production of large companies.
- Unemployment at lower level: Due to the closing of many small production units and large companies many workers will lose their jobs. Many people around the world who are linked with oil and gas industry directly or indirectly will definitely go to home with the loss of job. The number of unemployment will increase day by day as pandemic crosses border of every country.
- Effect on manufacturing: Production units that run on the oil and gas will be shut down due to Covid_19. It will cause the shortage of things of daily use. The shortfall of many objects will increase as Coronavirus grows.
- Impact on Stock Market: The stock markets around the world are crashing because the world is under lockdown and there is no business. It can influence in several ways. I.e.
- Loss of personal investment
- Bankruptcy of countries with small economy
- Low investment for a long time
- Collapse of Small industries
Coronavirus is not only effecting the human body and causing death but it is also an important factor that is responsible for economic crisis. It has devastating impacts on the industry of oil and gas.
