Going with the flow: Iraq increases the price of oil to Asia after Saudis

 

oil price hike

Iraq that has been suffering from months of social unrest, stemmed mainly from harsh economic realities, finally saw an opportunity to boost its coffers, perhaps being inspired by Saudi Arabia.

It raised the crude oil price for Asia to $1.10, an increase of 0.70 cents. Saudis did the same last week for the region.

Iraqi unrest mainly springs out from Basra, the oil-rich, Shia-dominated southern region.

Iraqis raised the price of Basra light crude for Asia, perhaps in the hope of addressing the catalogue of grievances raised by the protestors over the lack of basic facilities, despite playing the key role in bolstering the state’s revenues.

Iraq may not be as influential as Saudi Arabia in the OPEC+, despite being the world’s second biggest oil exporter. Its potential for substantial output, however, remains significant, once the internal dissension is addressed satisfactorily.

In a surprise move, Iraq is cutting the prices of all forms of oil to Europe by at least 0.80 cent. Analysts see this as a way of keeping an eye on a possible shale boom as an inevitable response to the price hikes.

On Monday, oil prices dipped slightly at the news that the Europeans lockdowns can only get tougher, even to the level of imposing curfews in certain cities.

In the UK, for instance, the level of infection rate at present is akin to something uncontrollable with a steep increase in deaths. People are warned not to venture out at all, unless it is for something deemed essential.

Understandably, the oil demand may go down with less traffic on the roads and this may affect the price in the coming days. On a positive note, however, the vaccination drive is in full swing.

It takes a few weeks to see the impact of the vaccines and if the signs are encouraging, the governments will ease out the restrictions in proportion to the degree of success of the inoculation, which will lead to the revival of economic activities – including that of the oil sector and its myriad of tentacles.

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