Oil, COVID-19 and Global Economy

Abstract

How can oil prices turn negative, and what does it mean for the global economy? This article explains the new turn in the global economy and the role that oil plays in it. This paper argues that the COVID-19 pandemic instantly led to a breakdown of global supply chains, with wide consequences on production and distribution. This crisis is argued to be fundamentally different from previous ones, including the Great Depression of 1929, the collapse of savings and loans in 1987, and the global financial crisis of 2008. The 2020 economic crisis of COVID-19 accelerated rapidly. As it got to the heart of production, it disrupted global supply chains and distribution centers, and paralyzed commercial transportation systems around the world.