the streets no one is driving along the
journeys very fewer making the oil
we're not consuming with the lockdown
has come an almighty slump in demand for
oil but while it's still pumping out of
American soil and nowhere left to store
it panic has ensued u.s. prices of oil
due for delivery next month plunge
yesterday to minus $38 it since
recovered to around zero optimists hope
the collapse was mainly technical and
isolated but today the slump spread
prices for June also collapsed dropping
42% at one point hitting $12 a barrel
further Falls followed in other markets
like Brent crude and when stock markets
opened around the world this morning or
Greece their slide to nearly all falling
in value today analysts warned we might
not have seen the worst of this yet and
this isn't just a problem for the US but
for anyone that produces oil it could
get worse before it gets better
the storage problems aren't going to go
away the trajectory I think really
depends on how quickly
Kovach 19 is under control and demand
and transport normal life resumes as
well as potentially on the supply side
those producers Russia Saudi North
America reaching an agreement to
restrict supply the American president
disagrees supply isn't the problem he
says his traders trying to make a quick
buck so if you take a look at it you'll
see it's more of a financial thing than
an oil situation but because you take I
believe in a month or so in other words
go a little bit out it's at 25 and 28
dollars a barrel
so it's largely a financial squeeze and
they did get squeezed little over a week
ago the group of oil-producing nations
OPEC agreed to cut production by 10% by
June the boss of the International
Energy Agency says the cut can't wait
the most important thing is the Saudi
area Saudi Arabia Russia and other
producers agreed to cut production by
it will be effective their decision as a
1st of May in my view they should as
soon as possible within the 24 hours cut
the production and give a breathing
space to oil indices in the US they may
call it black gold but the fear is black
gold might just not be worth enough for
long enough to keep these pumps and
thousands of jobs in motion well earlier
I spoke to conservative MP Mel stride
who's the chairman of the Treasury
select committee and I began by asking
him if the lockdown does continue for
some months were the economic aid
promised by the Chancellor continued to
be open-ended well I think what the
Chancellor has said is that it's a case
of whatever it takes to support the
economy and clearly what it's being
attempted here is to keep what would
otherwise be entirely viable businesses
afloat and functioning such that when
this recovery comes back and it will
come back in time we don't know when yet
but it will do that those companies
start to fire up and the economy starts
to move forward I think the interesting
question that you might be asked is well
how long could the government go on
paying millions of people's wages and so
on through furlough schemes and
providing soft loans and that is really
a question about how much the government
can and is prepared to borrow and there
I think we actually have a reasonable
amount of headroom albeit that borrowing
will be undoubtedly spiking in the
current month so here but it's not
indefinite is it at what stage have you
calculated that that borrowing has to
come to an end because we simply can't
afford it well in terms of affordability
and I think there are two issues here or
what one is what what size of debt are
we heading towards and the obr has
suggested on the basis of a three month
lockdown or three months of phasing out
of lockdown that we'd hit a debt level
approaching a hundred percent of GDP now
that is indeed a historic high for
peacetime however in the second world
war for example it hit two hundred and
fifty percent so that's the first point
the second point is when you save
affordability what is the cost of
servicing that
and the government has been able to
borrow a historically very low interest
rates and I think it's a reasonable
assumption to make that it will continue
to be able to do so and on that basis I
think probably it's got a reasonable
amount of fuel in the tank in terms of
additional borrowing to get us through
this and he's absolutely right
incidentally that it does that because I
think the alternative of stepping back
at any point and saying right we'll just
stop supporting these companies or ease
off too early too quickly and you'd find
that that economic bounce-back would not
occur and what you'd see actually is a
medium and long term scarring of the
economy which would takes a long time to
fix