The price of US oil has turned negative for the first time in history, as the current coronavirus pandemic continues to heavily impact on the industry.
This means that oil producers are currently paying buyers to acquire the oil, over fears that storage capacity for the commodity could run out next month.
Due to the current pandemic, demand for oil has plummeted, with people across the world being urged to remain indoors unless for essential travel.
With no end in sight for the lockdown to end, and for the industry to start recovering, oil firms have begun to rent tankers to store the surplus supply.
Yesterday, the price of a barrel of West Texas Intermediate (WTI), the benchmark for US oil, fell as low as -$37.63 a barrel.
Brent Crude was also down 8.9% yesterday, meaning that a barrel was valued at less than $26 each.
The representative body for the UK’s offshore oil and gas sector has warned the latest oil price developments could fundamentally undermine the ability of the industry to recover and serve the energy transition.
It comes as US crude oil prices continued to drop this evening while the international benchmark Brent crude traded at less than $26 a barrel. While WTI is a localised trading market in the US, OGUK this evening warned it remains concerned about the continued low prices of Brent crude.
OGUK Chief Executive Deirdre Michie said: “While we have anticipated continued pressures on oil markets, there’s no getting away from the fact that this situation is a body blow for an industry already creaking under the strains of the impact of COVID-19 and sustained low commodity prices.
“The dynamics of this US market are different from those directly driving UK produced Brent, but we will not escape the impact. Ours is not just a trading market; every penny lost spells more uncertainty over jobs, our contribution to public services and to the just transition we all want to see. OGUK will be pressing the case for a COVID-19 resilience package to governments in the coming days which will focus on protecting the supply chain, jobs and our ability to continue to reposition ourselves for the future.”