[Caixin Network] (Intern reporter Zhao Xuan, reporter Luo Guoping) "Low oil prices will be a prolonged process. This isn’t a result of the pandemic causing low prices, but fundamentally due to the supply-demand relationship." On the evening of April 26, the former Chairman of Sinopec Group, Fu Chengyu, at an online conference hosted by Renmin University of China, assessed the current sluggish oil market and believes that low oil prices will persist for 1 to 3 years.

    On March 6, negotiations for deepening production cuts led by Saudi Arabia and Russia in the OPEC+ collapsed, leading international crude oil futures prices to plummet, which has since lost about 60%. As of press time, the WTI crude oil futures price was around $16 per barrel; Brent crude oil futures were about $21 per barrel.

    Fu Chengyu believes that the trend of oil prices mainly depends on the development of the COVID-19 situation. Both Russia and Saudi Arabia have lost control over the oil price trend. The demand for oil has been severely impacted due to the COVID-19 pandemic, combined with the geopolitical games of major powers, making it a significant driving force behind the price war.

    "Don’t be eager to consider bottoming out the issue. Oil prices will surely be volatile and trending downwards. During the pandemic, oil prices might have an upward shock, but they won’t rise too high," he said.

    The imbalance of supply and demand is the fundamental issue. Fu Chengyu candidly stated that neither the COVID-19 pandemic nor the oil price war and the sharp drop in oil prices have fundamentally addressed the problem of excessive oil supply capacity. The supply issue has been temporarily obscured, but as soon as oil prices recover to $50 per barrel, production will surge again.

    Following the shale oil revolution, the U.S. lifted its crude oil export ban in 2015. By September 2019, the U.S. transitioned from net oil imports to net exports, reshaping the global oil supply pattern.

This article is sourced from the paid news reading website "Caixin Network".