this is really, really bad, but there is a light at the end of the tunnel
In all of my 67 years have I (or anyone else for that matter) experienced anything the last two weeks, worldwide pandemic, stock market crash and stupidity by SA and Russia. In otherwords a perfect storm for a deep recession.
2020 is like the oil price crash of 1986 where we had increased supply from Alaska and the North Sea exceeding demand like we see today. the price crashed to single digits as SA kept the taps open. Demand at the time was about 55 MMbblpd.
2020 is worse becuase although demand was at 100 MMbblpd before the pandemic, the two stooges are increasing supply by about 3.5 MMbblpd at the same time as demand is crashing by up to 10 MMbblpd.
WTI at the time of writing is now $23/bbl with no end in sight. It could go to $10-$15/bbl.
If brent goes to $20/bbl, both Russia and SA will lose $147 Billion each per annum from a base of $60/bbl.
The damge to Alberta will much worse as WCS now trading at WTI minus $13, will be for the most part uneconomic to cover cash costs. So we should expect to see significant reductions in production which will help reduce the overall glut of oil.
That said, the question is how long does it take for SA and russia to capitulate and cut back production? Also how fast will US shale oil drop?
Clearly, demand will pick up as the world returns to normal in the summer.
As far as VII is concerned, they should cut back production to meet heavy oil demand for condy, and cease all production that is not hedged. fortunately half of their Condy is hedged at $50 WTI. Hopefully they do not have any three way collars.
I think the market will forgive them if they go into a slow down survival mode.