Saudi and Chinese firms register record losses

WTI price last week

Despite the relatively steady oil price in the global market, the large oil firms in China and Saudi Arabia have recorded massive losses.
During the pandemic, China saw an opportunity when the oil prices fell to record low levels; once it even turned negative, leaving economists in an enviable academic lurch, failing to come to terms with something that had never happened before.
Cashing in on the situation, China bought crude oil on the cheap and stored it in their vast network of storing facillities. Saudi Arabia, meanwhile, sold massive stock to China, as there was none to buy due to near-zero demand at the peak of Covid-19 .
Judging by the press reports, the firms in both countries seemed to have made a miscalculation - the scenario of the economies coming back to normal in a matter of weeks.
That means the demand did not pick up as they anticipated and massive stock remain in storage facillities - much longer than they should.
As a result, the Chinese firms to struggle to sell their oil stocks and up untils that happens, Saudi firms will not be able to sell the oil to the Chinese, leaving both parties in the dolldrums.

 

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