Big oil companies, big losers of the pandemic

Joshua G. Veiga ¹

Transnational Corporations and Covid-19/II

The economic collapse caused by the COVID-19 health emergency has been a widespread phenomenon, but with unequal and asymmetrical impacts both among countries and among large transnational corporations. The health measures and policies adopted in response to mitigate the health crisis have had differentiated consequences for industries and companies. A prime example is the oil industry, which is currently facing a critical situation. Since the beginning of 2020, the industry had been experiencing an oversupply of oil, which was driving prices down. In this context, lockdown measures triggered a precipitous drop in prices by decimating global demand for crude oil, particularly in China, the engine of the global economy and the world's largest oil importer since 2017. The Organization of the Petroleum Exporting Countries (OPEC), along with other oil-exporting countries (OPEC+), reached agreements to implement coordinated reductions in oil supply in order to stabilize prices and mitigate the adverse effects of an emerging global crisis. However, they failed to contain in time what has so far been one of the most dramatic impacts in the recent history of the industry, when on April 20 the futures contracts of the West Texas Intermediate (WTI) mix closed at an astonishing negative price of -$37.63 per barrel.

1- Laboratory of Studies on Transnational Companies of the Institute of Economic Research of the UNAM.

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