Oil prices had changed very little on the 13th of this month, July, as the number of coronavirus cases in many countries climbed. There has been something of a flurry of announcements though regarding possible vaccines, and the recent agreement in the EU about a recovery fund that is intended to revive member states economies, a fund that is somewhere in the region of 1.82 trillion Euros.
As for oil prices, at the time of writing they stood at:
· Brent Crude: up 0.35% to $43.29 per barrel
· West Texas Intermediate: up 0.54% to $40.81 per barrel
Right now, oil prices are not likely to rise to any point where it becomes noticeable at the pump, at least not until there is a clear indicator that the pandemic is slowing down. What does this mean? Well, prices will not be going back up, to at least pre-virus levels, until at least the end of this year (according to speculation which we will go over further down) and perhaps not even then.
In Europe, Spain included, of course, the virus appears to have been cornered. Some Asian states and the Americas still have a long way to go through, so perhaps the end of this year may be a little optimistic.
Close to 15 million people have been infected so far, and over 600 thousand have died as a result of the virus. There is some hope on the horizon, though.
AstraZeneca and the University of Oxford in the UK is developing a vaccine that is showing some very early promise. It has been reported as both being safe and prompts an immune response in the body. These positive early results mean that there is a good chance that it will be ready, and in use, by the end of this year.
Of course, it may be several months after that before the virus could be said to be ‘under control’ but only time will tell.
How all of this affects crude oil prices, which in turn will, of course, affect pump prices in Spain...
Fawad Razaqzada, a market analyst at ThinkMarkets, says:
“Over the past few weeks, crude oil prices have actually been uncharacteristically quiet, suggesting a potentially sharp move could be on the cards soon,"
“If the recovery in demand turns out to be quicker and more robust than expected, the supply surplus could diminish fast given the ongoing supply restrictions by the OPEC+ group. This should mean higher oil prices, everything else being equal.”
As already mentioned, it may not turn out to be 'quicker and more robust than expected' it could just as easily go the other way. The demand for fuel did recover from a massive drop of 30% in April, use is still far lower than pre-virus levels and is falling again because infection rates in the US continues to rise.
In short then, yes. Oil prices in Spain will rise post-pandemic – the only questions are when, and how by how much? Even when this is all over, early speculation is that those now working from home will continue to do so – it’s cheaper for the companies they work for, for one thing. This will inevitably lead to fewer vehicles on the road than there were before the outbreak.