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Oil's 60 Percent Crash Is the Tip of an Iceberg

Oil prices are weakening as the impact of the coronavirus on  demand reaches every part of the industry. For producers, the outlook is even worse as the real prices being paid for oil are worse still. Having collapsed by about 60% this year, Brent and WTI crude have stabilized at around $25 a barrel, but for actual cargoes discounts mean that in the physical market some crudes trade at $15, $10 and even as little as $8 a barrel. Crude in the physical market trades at a premium or discount to Brent, WTI and other benchmarks. At times of surplus, premiums narrow and discounts widen. But the current situation is almost unprecedented, with discounts in some cases at all-time highs. Nigeria, the biggest oil producer in Africa, is selling its flagship Qua Iboe crude at a discount of $3.10 a barrel below the Dated Brent benchmark, the largest in at least two decades. Colombia is selling its Vasconia crude at a discount $7.75 a barrel to Brent, a 4 1/2-year low

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