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Global oil markets remained under intense pressure on Tuesday, with Brent crude dropping below $20 per barrel for the first time in 18 years while other major benchmarks across the world tumbled. 

Brent, the international crude marker, slipped to $18.10, indicating that markets see no immediate let-up to the collapse in oil demand that sent some US oil benchmarks plunging under $0 for the first time on Monday, leaving producers paying for buyers to take their oil away while available storage is scarce.

Coronavirus has sent the oil sector into a state of crisis, with lockdowns implemented by authorities to smother the outbreak slashing demand for crude by as much as a third.

Contracts for the US benchmark West Texas Intermediate for delivery next month tumbled as low as minus $40 a barrel on Monday. Analysts at Citi warned that “if global storage worsens more quickly, Brent could chase WTI down to the bottom”.

The collapse in the May WTI contract was partly a technical product of the fact that it expires on Tuesday, meaning trading volumes were low and making the contract for June delivery more noteworthy, analysts said. That contract held above $20 a barrel on Monday but slid as much as 42 per cent on Tuesday to trade at lows of $11.79, suggesting the blowout in the May contract was more than a blip and that the entire global oil market faced challenges.

Goldman Sachs analysts said the June contact was likely to face downward pressure in the coming weeks, pointing to the “still unresolved market surplus”.

“As storage becomes saturated, price volatility will remain exceptionally high in coming weeks,” they said. “But with ultimately a finite amount of storage left to fill, production will soon need to fall sizeably to bring the market into balance, finally setting the stage for higher prices once demand gradually recovers.”

Warren Patterson, head of commodities strategy at ING, said it was likely that “storage this time next month will be even more of an issue, given the surplus environment”.

“And so in the absence of a meaningful demand recovery, negative prices could return for June,” he added.

European equities traded lower, partly dragged down by weaker energy stocks. The continent-wide Stoxx 600 was down 1.9 per cent, with its oil and gas sub-index dropping 3.3 per cent. In London the FTSE shed 1.7 per cent, while Frankfurt’s Dax slid 2.3 per cent. 

Equities were also broadly lower in Asia, with futures tipping US stocks to fall 1 per cent when trading in New York begins later.

On Wall Street overnight, the S&P 500 closed down 1.8 per cent, partly because of weakness in energy shares, but also due to increased pessimism over the time it will take for countries to emerge from lockdowns.

In fixed income, the yield on the 10-year US Treasury fell 0.03 percentage points to 0.585 per cent as investors retreated to the safety of the debt.

Chithradurga, Mar 25: COVID-19-positive cases in Karnataka jumped to 42 from 33 on Tuesday, with nine cases added to the list overnight. The daughter of G M Siddeshwara, Davanagere MP, is the latest case.

Sources from the Siddeshwara family said that the MP’s daughter, along with her two children, who started from Guyana, first landed at New York airport and from there, she took a flight to New Delhi.

From Delhi, she flew to Bengaluru. And then, she and her children travelled with her father in a chaffeur-driven car on March 21 to their house in Bheemasamudra.


Siddeshwara said that protocol for COVID-19 had been followed and all who returned were under self-quarantine at his house. However, the administration was not informed of her travel history till the samples were given for test, Chitradurga Deputy Commissioner Vinoth Priya R told TNIE. The DC said the test results of the MP’s daughter were collected by district health authorities and sent to Shivamogga Institute of Medical Sciences on March 22.

The test turned out to be positive for COVID-19 and she was shifted to the isolation ward at Chigateri district hospital in Davanagere. This is the first positive case in Chitradurga.The patient, who is the wife of an Indian Diplomat in Guyana, complained of flu-like symptoms and remained self-quarantined at her house at Bheemasamudra. Her condition was informed to the health department, which collected her samples and forwarded it to the SIMS for tests, results of which arrived on Tuesday evening.

The DC said that samples of family members including the two children, and those working at the MP’s house would be collected and sent for testing to ensure proper protocol is followed. The administration has declared a ‘red zone of a 5km radius around Siddeshwara’s house at Bheemasamudra. DHO Dr Palaksha said that the patient is not suffering any serious problems and is normal. However, we have put her in the isolation ward of Chigateri District Hospital in Davangere, he said.

Dubai, May 5: Tickets on repatriation flights from UAE to India, which start on May 7, could be costlier than regular airfare, and adding to the financial woes of those flying back. Nearly 200,000 Indians in the UAE have registered on the website seeking to return home.

“A one-way repatriation ticket to Delhi will cost approximately Dh1,400-Dh1,650 - this would earlier have cost between Dh600-Dh700 [during these months],” said Jamal Abdulnazar, CEO of Cozmo Travel. “A one-way repatriation flight ticket to Kerala would cost approximately Dh1,900-Dh2,300.”

This can be quite a burden, as a majority of those taking these flights have either lost their jobs or are sending back their families because of uncertainty on the work front. To now have to pay airfare that is nearly on par with those during peak summer months is quite a blow.

Sources said that officials in Indian diplomatic missions have already initiated calls to some expats, telling them about likely ticket fares and enquiring about their willingness to travel.

Although many believed repatriation would be government-sponsored, Indian authorities have clarified that customers would have to pay for the tickets themselves. Those who thought they were entitled to free repatriation might back out of travel plans for now.

Fact of life

But aviation and travel industry sources say higher rates cannot be escaped since social distancing norms have to be strictly enforced at all times. That would limit the number of passengers on each of these flights.

“One airline can carry only limited passengers - therefore, multiple airlines are likely to get the approval to operate repatriation flights,” said Abdulnazar. “Also, airports will have to maintain safe distance for passengers to queue up at immigration and security counters.

“Therefore, it is recommended that multiple carriers fly into multiple Indian airports for repatriation to be expedited.”

The Indian authorities, so far, have not taken the easy decision to get its private domestic airlines into the rescue act. Gulf News tried speaking to the leading players, but they declined to provide any official statements. So far, only Air India, the national airline, has been commissioned to operate the flights.

Air India finds itself in the driver's seat when it comes to operating India's repatriation flights. To date, there is no confirmation India's private airlines will be allowed to join in.

UAE carriers ready to help out

UAE’s Emirates airline, Etihad, flydubai and Air Arabia are likely to also operate repatriation flights to India after Air India implements the first phase of services.

“We are fully supporting governments and authorities across the flydubai network with their repatriation efforts, helping them to make arrangements for their citizens to return home,” said a flydubai spokesperson.

“We will announce repatriation flights as and when they are confirmed, recognising this is an evolving situation whilst the flight restrictions remain in place.”

An AirArabia spokesperson said the airline is ready to operate repatriation flights when the government tells them to.

Travel agencies likely to benefit

Apart from operating non-scheduled commercial flights, the Indian government is also deploying naval ships to bring expat Indians back. Sources claim the ships are to ferry passengers who cannot afford the repatriation airfares.

Even then, considering the sheer numbers who will want to get on the flights, travel agencies are likely to see a surge in bookings since airline websites alone may not cope with the demand set off in such a short span.

Learn from Gulf governments

In instances when they carried out their own repatriation flights, some GCC governments paid the ticket fares to fly in their citizens. Those citizens who did not have the ready funds could approach their diplomatic mission and aid would be given on a case-to-case basis.

Should Indians wait for normal services to resume?

Industry sources say that those Indians wanting to fly back and cannot afford the repatriation flights should wait for full services to resume once the COVID-19 pandemic settles.

But can those who lost their jobs or seen steep salary cuts stay on without adding to their costs? And is there any guarantee that when flight services resume, ticket rates would be lower than on the repatriation trips.

As such, normal travel is expected to pick up only after the repatriation exercise to several countries is completed. UAE-based travel agencies are not seeing any bookings for summer, which is traditionally the peak holiday season.

“Majority want to stay put unless full confidence is restored,” said Abdulnazar. “I expect full normalcy to be restored not until March 2021.

“People have also taken a hit to their income. Without disposable income, you will curtail your travel.”

What constitutes normalcy?

Airfares are expected to remain high, given the need to keep the middle seats empty to practise safe distance onboard.

“We expect holiday travel to resume by October or November - but, the travel sentiment will not go back to pre-COVID-19 levels anytime soon,” said Manvendra Roy, Vice-President – Commercial at holidayme, an online travel agency. “The need to keep the middle seat vacant will add 30-40 per cent pricing pressure per seat from an airline perspective.

“This will make holidays more expensive.”

As for business travel, it will take some time to recover. Corporate staff are now used to getting work done via conference calls. “Companies will also curtail their travel expenditure since their income has taken a hit,” said Abdulnazar.