Just What the World Needs: $20 Per Barrel Oil

Oil prices crashed Monday due to a disagreement between two of the world's largest oil producers, Saudi Arabia and Russia, amidst a slump in oil demand due to the outbreak of the coronavirus pandemic. Oil will flood the market as demand drops.

3 minute read

March 10, 2020, 10:00 AM PDT

By Irvin Dawid


Oil Rig

PeterVandenbelt / Shutterstock

"The threat of a coronavirus-fueled oil war and ongoing panic around the outbreak brought markets to stunning lows Monday, triggering a forced halt to trading after the Standard & Poor’s 500 index sank 7 percent shortly after the opening bell," report Thomas HeathWill Englund and Taylor Telford for The Washington Post on March 9. "The Dow Jones industrial average cratered more than 2,000 points at the open, clawed back some losses, then drove the day’s lows to new depths."

Oil prices tumbled into the $30s, after Saudi Arabia and Russia deadlocked over production. The Saudis had been pushing for a cut in output to prop up prices, but reversed course when Russia balked and decided, instead, to flood the market with hundreds of thousands of additional barrels per day — a move analysts fear may trigger a price war.

"Markets are bracing for oil prices in the 20s," said one energy analyst in a Bloomberg News report on Monday's oil price plunge. That view was shared by Ali Khedery, a former State Department and Exxon Mobil adviser, who tweeted, "$20 oil in 2020 is coming," wrote POLITICO energy reporter, Kelsey Tamborrino, in her March 9 Morning Energy newsletter.

That means more pain for U.S. producers — and a newly aggressive Saudi Arabia to deal with in overseas markets that had just opened up to U.S. crude.

Effect on U.S. oil producers

"Now the fracking industry, which President Donald Trump sought to expand with hard-line support for increased fossil fuel production, faces potential ruin," reports Alexander C. Kaufman, who covers climate change, environmental policy and politics HuffPost.

Fracking, a ballyhooed but financially fragile sector, struggled to stay afloat with crude selling at $50 per barrel. If prices stay around $30, or even fall as low as $20, U.S. frackers simply might be unable to keep up.

“It’s a financial bloodbath,” said Clark Williams-Derry, an analyst at the Institute for Energy Economics and Financial Analysis. "With oil prices at the current level, there’s a real risk many of them will simply go bankrupt."

Kaufman elaborates on the fracking connection, noting the differences on the drilling strategy between the two leading Democratic presidential candidates, with Bernie Sanders pledging to ban it and Joe Biden who would limit or regulate it better.

Drawing an analogy with the coronavirus pandemic, Williams-Derry "likened the effect of low oil prices on U.S. frackers to an unhealthy person contracting the rapidly spreading coronavirus."

“You think of someone with a weakened immune system, and now they’re facing the coronavirus,” Williams-Derry said. “This was an industry that was already touch-and-go financially, already having severe difficulties managing debt loads. This just accelerates that problem, and brings all the other problems to the fore.”

It should be noted that fracking is a drilling strategy that applies to both oil and natural gas. It is not clear how a glut of oil will impact fracking for natural gas, which is a major issue for the swing state of Pennsylvania.

Hat tip to Dino Grandolino's Energy 202 PowerPost in The Washington Post.

Related in Planetizen:

Monday, March 9, 2020 in The Washington Post

portrait of professional woman

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching. Mary G., Urban Planner

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching.

Mary G., Urban Planner

Cover CM Credits, Earn Certificates, Push Your Career Forward

Aerial view of town of Wailuku in Maui, Hawaii with mountains in background against cloudy sunset sky.

Maui's Vacation Rental Debate Turns Ugly

Verbal attacks, misinformation campaigns and fistfights plague a high-stakes debate to convert thousands of vacation rentals into long-term housing.

July 1, 2025 - Honolulu Civil Beat

Logo for Planetizen Federal Action Tracker with black and white image of U.S. Capitol with water ripple overlay.

Planetizen Federal Action Tracker

A weekly monitor of how Trump’s orders and actions are impacting planners and planning in America.

July 9, 2025 - Diana Ionescu

Map of Haussmann's redesign of Paris in the 1850s through 1870s under Napoleon III.

In Urban Planning, AI Prompting Could be the New Design Thinking

Creativity has long been key to great urban design. What if we see AI as our new creative partner?

June 30, 2025 - Tom Sanchez

View of dense apartment buildings on Seattle waterfront with high-rise buildings in background.

King County Supportive Housing Program Offers Hope for Unhoused Residents

The county is taking a ‘Housing First’ approach that prioritizes getting people into housing, then offering wraparound supportive services.

3 hours ago - Real Change

Aerial view of suburban housing near Las Vegas, Nevada.

Researchers Use AI to Get Clearer Picture of US Housing

Analysts are using artificial intelligence to supercharge their research by allowing them to comb through data faster. Though these AI tools can be error prone, they save time and housing researchers are optimistic about the future.

4 hours ago - Shelterforce Magazine

Green bike share bikes parked in a row on a commercial street with outdoor dining and greenery.

Making Shared Micromobility More Inclusive

Cities and shared mobility system operators can do more to include people with disabilities in planning and operations, per a new report.

5 hours ago - Cities Today