A double black swan event, combining the coronavirus crisis and a crude oil price war between Saudi Arabia and Russia, has put heavy pressure on balance sheets of much of the energy industry. Capex budgets have been slashed as crude prices have collapsed. Debt levels are under heightened scrutiny. As several observers have commented, the name of the game is “survival.”

Few claim a real handle on the price of crude, but prices have trended lower, with an expected oversupply pushing WTI prices down as far as $20/bbl as of mid-March. Any success from a return to the bargaining table by Saudi Arabia and Russia might help slow the pace of inventory builds, but the bigger factor for crude prices is COVID-19-related demand destruction.

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