Illustration: Luo Xuan/GT

Oil prices have experienced an unexpected decline in 2020, a year that has undoubtedly gotten off to a bumpy start. The sudden and steep fall in oil prices may offer opportunities for energy importers to stock up resources, and for China to fulfill its energy purchase commitment to the US outlined in the phase one trade deal. 

Oil prices crashed after the OPEC failed to strike a deal with non-member countries regarding production cuts, leading to fears of an all-out price war. On Sunday, global oil price benchmark Brent crude fell 29 percent to $32.09 a barrel for May deliveries. The price of liquefied natural gas (LNG) has also been impacted.

A stable energy price will benefit the world economy in long term. Global energy producers involved should actively coordinate to provide a solution to the current predicament which could push the world economy to the brink of a massive depression. 

For now, net oil and LNG importers such as China and India can take this opportunity to stockpile crude oil and LNG while prices are low. By doing so, they could help restore order to global oil prices. 

Due to the coronavirus outbreak, China's energy demand has inevitable dipped. As the country's measures to contain the outbreak take effect and businesses nationwide resume operations, energy demand will likely return in the near future. 

Foreseeing that scenario, it is time for China to take production resumption into account and place more energy product orders according to market demand while prices have slumped. Buying from the US could definitely be an option.

There have been mixed voices in the US regarding whether or not China will fulfill its trade deal with the US. Some have shown their faith in China. US Energy Secretary Dan Brouillette said last week that he does not expect the coronavirus outbreak to affect China's agreement in the phase one trade deal to buy oil, gas and coal from the US, according to a report from Reuters. Others have asserted that China will find it difficult to meet its commitments to purchase US products. 

However, despite the US' "good cop, bad cop" attitude, China will not change its stance. It will purchase US energy products according to market demand and at its own pace, though the lower energy price does offer the country an opportunity to make good on its commitment to the US. 


The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn