Craig Lowrey, one of our Senior Consultants, was live on BBC Radio Norfolk’s airwaves discussing the recent drop in oil prices, following a dispute by Russia and Saudi Arabia over reducing oil production.
Craig told listeners that last Friday in response to the Coronavirus hitting global demand for oil, there was a failure to agree on the cuts to production. As a consequence, Saudi Arabia announced it would reduce prices for its oil. This has seen oil prices drop off quite sharply with a lot more volatility in the last few days.
Discussing what this will mean for energy customers’ bills, Craig said: “We have seen a drop in the wholesale prices for gas and electricity, and that has the potential to feed through into household and business bills for energy.”
On this point, the presenter Chris Goreham asked if it was just a perception that energy bills rose faster than they fell. Craig agreed that is partly perception. However, he explained that many companies buy their energy contracts in advance, so price moves take time to filter through as a result. Going further, Craig explained that those on fixed-term tariffs would only see the potential drop in prices when “those deals come to an end”. However, given the general uncertainty in the market, the potential for lower bills will certainly help customers, Craig said.
The presenter took the opportunity to ask Craig about the effects of the Coronavirus on the markets. He explained it was a rapidly evolving situation, with the oil market in uncharted territory, due to the uncertainty surrounding impacts of the virus. Speaking further, Craig said that until we get “clarity that uncertainty is going to dominate”.
Don’t worry if you missed it, you can catch the whole interview here, with the conversation starting at 2:19:57.
You can also read more on Craig’s thoughts on the topic in this blog.