The oil price is a symptom not a cause.
The real sequence is
- Near complete shutdown of airline, travel and leisure industries, severe supply chain difficulties impacting on international shipping and all manufacturing, etc. etc.
- Emergency bank base rate cuts leading to
- Decimated profitability of many banks and insurers, and
- Worries about funding of pension obligations, about corporate debt, about financial crisis two.
It's too early to know if the coming recession is V shaped, U shaped or even L shaped. At some point the market will start sorting the dead men walking from the walking wounded from the few companies with excellent future prospects arising from the elimination of weaker competitors. This will take a while. I have dipped a toe in, buying companies that are neither consumer-facing nor highly indebted, at prices that would have been seen as huge bargains three months ago. Needless to say they are all below the price I paid at present. As long as it's not an L shaped depression, I hope to come out on top.
As for the oil price, that ought to be helpful to airlines and suchlike, but not until people are allowed to travel and until people want to travel for fun. The virus epidemic has to end first, or become so universal that there is no point trying to keep it out of anywhere.
Don't ask me what the Saudis are up to. I cannot make sense of their actions. Maybe its political and they want to give Russia a bloody nose and Iran something far worse? USA shale oil wells won't cease to exist just because its not profitable to drill new ones. Shutting them in for now will actually mean they flow better when the oil price recovers. Do the Saudis realize they are no longer the world's swing producer? That is now the USA. Shale wells do not take long to drill and put into production once it is again profitable to do so.
If you think the oil price is crazy, why is the price of a manufacturer of soap, hand sanitizer and moisturizing cream down with everything else?