Forget showers and flowers, April distance brings May existence. I saw that written on a Seattle sidewalk, but it's coming up all over the place. I'll share a glimpse of my latest column, and then Ben Geman will get you up to speed on other news.
Today's Smart Brevity count: 1,199 words, a 4.5-minute read.
Illustration: Aïda Amer/Axios
The world is short on many things we need — masks, tests, toilet paper — yet we’re too long on one thing we suddenly don’t need much: oil.
The big picture: This oversupply crisis is, understandably, lost on people. We’re locked down with nowhere to go, not seizing cheap pump prices, struggling to manage our grave new world and mourning loved ones afflicted by the coronavirus.
Why it matters: Even though most of us aren't paying attention, the havoc the pandemic is wreaking on the global oil industry by choking demand will ripple out into the broader economy, and eventually affect many of us.
“The war against the virus is to stop people moving around, but that is also the purpose of oil. Oil is made for people to move around by cars, airlines, ships. So this war hits right on the nerve system of the global oil industry.” — Per Magnus Nysveen, head of analysis at the consultancy Rystad Energy
What they’re saying: “There’s a glut of oil like no one has ever seen before,” President Trump said in a White House briefing Friday. “It is good in many ways, and depending on who you are, it’s bad.”
Reality check: Once the price of oil reaches around $20 a barrel, low oil prices hurt the global economy more than they help, Nysveen says.
The bottom line: These cuts make today's oil industry's crisis slightly less bad, but still historically terrible.
The decline in global oil consumption this month alone — 25 million barrels a day — will be seven times bigger than the biggest quarterly decline after the 2008 economic crash, according to data by consultancy IHS Markit.
That's one-quarter of the world's normal daily consumption at just under 100 million barrels, Amy writes.
IHS predicts that the decline for the second quarter of 2020 will average 22 million barrels a day.
Oil prices haven't changed all that much since Sunday's finale of days worth of negotiations yielded a final international agreement on historically steep oil production cuts.
Where it stands: The global benchmark Brent crude is trading in the $31-per-barrel range, not far from where it ended last week, and the U.S. benchmark WTI at around $23.
Why it matters: The market's reaction to the OPEC+ agreement suggests a couple of things...
Catch up fast: The OPEC+ group led by Saudi Arabia and Russia reached a final deal to jointly cut production by 9.7 million barrels per day in May and June, which would represent about 10% of global demand before COVID-19.
The size of the cuts then decline in stages through April of 2022 (though things will be reassessed along the way).
The big picture: It's part of wider — and looser — commitments that add several million more barrels per day to the total figure, perhaps bringing the theoretical total to the 15 million range or even higher, though there's no precise tally.
Threat level: The oil sector still remains in deep distress. Bloomberg notes that the deal "won't save the weakest" among shale producers, and Axios' Dion Rabouin points out that more bankruptcies and defaults await, something we also looked at here.
China might delay submitting revised climate plans to the United Nations "at least until after the U.S. presidential election in November as officials focus on reviving the economy from an unprecedented slowdown," Climate Home News reports this morning.
Why it matters: China is the world's largest greenhouse gas emitter, and the story signals how the COVID-19-related postponement of critical UN talks, which had been slated for November, could shake up the landscape.
Under the 2015 Paris agreement, countries are supposed to submit revised emissions pledges to the UN this year.
The intrigue: The delay will give countries time to adjust their posture in response to the outcome of the U.S. presidential election, which otherwise would have occurred just a few days before the talks.
The new 2021 date for talks in Glasgow, Scotland has not yet been set.
The International Energy Agency will release revised estimates Wednesday about how much COVID-19 will cut oil demand.
Why it matters: Traders closely watch the monthly reports, which often contain market-moving information.
This one will draw particular scrutiny amid the pandemic and as analysts look for IEA's discussion of the OPEC+ deal and planned curbs by other nations.
What's next: Expect a huge downward revision to IEA's estimate from March 9. The expansion of lockdowns and the economic slowdown are forcing analysts to play catch up with the magnitude of the demand loss.
In early March, which feels like ancient history, even their "pessimistic" case projected only a 730,000 barrel-per-day reduction on an annual basis compared to 2019.
A couple of other oil-related things on my radar...
Today the U.S. Energy Information Administration will release its latest data on oil-and-gas production from U.S. shale formations.
On Tuesday the Texas Railroad Commission will hold a remote hearing on two companies' requests for the powerful body to impose mandatory production curbs.