U.S. oil prices fell to $11 per barrel Monday, a level not seen in at least 20 years.
The low price of West Texas Intermediate crude, a U.S. benchmark, comes amid collapsing demand from the coronavirus pandemic, which has shut down world economies and prevented people from traveling.
About 60% of the world’s oil normally is used to make transportation fuel.
The further drop in price Monday also reflected concern that the logistics of the oil industry — ships, pipelines, and storage tanks — will be overwhelmed soon from an oil supply glut with demand so low.
That demand fall has overwhelmed efforts by oil-producing states to curb oil production to raise prices. The Saudi Arabia-led OPEC, Russia, and other oil-producing nations recently agreed to cut production by nearly 10 million barrels per day beginning in May, a historic deal touted by President Trump, who claimed Saturday it would “save hundreds of thousands of jobs” in U.S. oil states. Wealthy nations in the G-20, such as the United States and Canada, are also expected to see their production fall by some 3.5 million barrels per day due to market forces.
Kevin Hassett, a senior Trump adviser who was chairman of the Council of Economic Advisers, addressed the price crash Monday morning, expressing optimism that the market would begin to return to normal as the global economy “turns back on.”
“That will drive up production, drive up the demand for energy and for oil, and I think that you’ll see us coming up off of these lows,” Hassett said on Fox News Business. “But one of the problems right now is that the consumption of energy, because the decline of production has declined so much, that people are actually running out of places to put the oil, and that’s why the price is so low.”
