Remember when crude oil prices went below $0 a barrel? 5 years later, prices are sliding again—but for different reasons

Five years ago to the day, U.S. crude oil futures fell below zero for the first time in history—an extraordinary collapse that stunned global markets and underscored the vulnerability of the physical oil trade. On April 20, 2020, the May contract for West Texas Intermediate (WTI) settled at an unprecedented minus $37.63 a barrel, as storage ran out and demand evaporated amid pandemic lockdowns.

Today, while crude prices are far from negative, they’re once again on the decline—albeit for very different reasons. This time the decline is driven by concerns over a global economic slowdown, trade tensions, and geopolitical uncertainties.

WTI futures dropped 1.75% on Monday to $63.55 a barrel, while Brent crude fell to $66.77, as investors braced for the economic fallout from U.S. tariffs and weaker global growth. The losses follow a brief rally last week and come amid renewed uncertainty over fuel demand, echoing themes last seen during the 2020 crisis.

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In 2020, the price collapse was driven by a near-total demand freeze, storage constraints in Cushing, Oklahoma, and technical pressure from expiring contracts. Traders were forced to unwind positions in an illiquid market, leading to negative settlement prices that defied conventional economics.In contrast, today’s retreat reflects macroeconomic risk. A Reuters poll last week showed a near 50% probability of a U.S. recession within the next 12 months, while trade tensions and sluggish manufacturing data have raised red flags for future consumption. The world’s largest oil consumer is now facing headwinds from within, rather than from a pandemic.
Still, the comparisons are instructive. Just as in 2020, sentiment is fragile and price moves are amplified by policy and positioning. The market may not be heading back into negative territory, but the shadow of sub-zero remains—particularly as geopolitical risks continue to cloud supply-demand balance.

Back in April 2020, the collapse forced structural changes: ETFs like the U.S. Oil Fund shifted out of near-month futures, OPEC+ announced record cuts, and the CME Group moved to allow for negative pricing on select contracts. Production in the U.S. stood at 12.3 million barrels per day and was slow to adjust despite demand collapse.Today, OPEC+ is expected to increase output by 411,000 barrels per day starting in May. Meanwhile, U.S.-Iran nuclear negotiations have made progress, potentially paving the way for additional Iranian barrels to hit the market. Supply-side uncertainty continues to weigh on prices, though storage conditions are far less acute than in 2020.

India, one of the world’s top oil importers, has again seen crude prices ease in futures trade. On the Multi Commodity Exchange, May contracts dropped Rs 101 to Rs 5,378 per barrel as traders reacted to weak global cues. Lower prices offer some macroeconomic relief, helping to narrow the current account deficit and ease inflationary pressures.

However, just as in 2020, lower prices do not necessarily equate to higher benefit if demand conditions weaken globally or trade dynamics shift. Back then, Indian refiners faced volume constraints and low throughput. Today, slower global growth and elevated freight costs could again dampen the pass-through advantage.

While the 2020 crash was triggered by extreme conditions, it exposed a reality that still holds: oil markets remain deeply susceptible to external shocks—be it a contract expiry, a demand crisis, or a policy misstep. Five years on, crude is not in crisis, but it is still vulnerable.

The five year anniversary of sub-zero crude prices is more than a historical footnote—it’s a reminder that even the world’s most liquid commodity, crude oil, can unravel when fundamentals and logistics collide.

Also read | Crude oil prices crash to 2021 levels amid trade war fears. What’s ahead?

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