Oil and Gas Markets and COVID-19: A Critical Rumination on Drivers, Triggers, and Volatility

The paper endeavours to explore and analyse some critical issues in the oil and gas market that cropped up around the spread of COVID-19 and tries to identify the key drivers and triggers pertaining therewith. The spread of the first wave that began in March 2020 is crucial because of the global economic downturn that ensued due to lockdown and imposed restrictions coupled with a protracted oil price war that began between Saudi Arabia and Russia. The paper tries to address some key research questions to understand the triggers and drivers around the pandemic. These are: (1) whether the behaviour of OPEC or its key players around the pandemic could be considered uniquely different; (2) what could the triggers be for the increased volatilities that cropped up in both physical and financial markets during the pandemic; (3) what was really different about the oil market crisis around the pandemic that transformed it to an unprecedented storage crisis; (4) what really went wrong with the much-hyped U.S. shale boom during the pandemic that led to the bankruptcy of several oil and gas companies, followed by huge job losses. The paper relies on a structured review of relevant secondary literature to address these exploratory questions and builds upon a retrospective rumination on the world oil market from 1960 to 2020. This is complemented by an analysis of supporting data and evidence obtained from various sources. Considering the intertwining of oil and financial markets around the pandemic, the lessons and findings from the paper would not only be highly relevant for policymakers and stakeholders in the oil and gas sector but would be equally relevant for those in the financial markets.