Crude Oil Price after Suez Saga: price fluctuates, but market sentiment remains positive


crude oil price market sentiment

As the Suez Effect has died down, the oil price seems to be heading towards its equilibrium – the position it generally held before the maritime incident; it’s premature to call it a crash, though.

It is true there is a serious risk of some European nations going back into lockdown; there are relatively success stories too in the battle against the Coronavirus in the continent.

In the United Kingdom, for instance, the success of vaccine rollout continues despite the concern raised about some side effects of the vaccines. In direct proportion, both the death rate and that of infection have plummeted; for the first time, London reported zero deaths on Sunday since the first lockdown.

Although the people in the United Kingdom are not out of the woods yet, the restrictions have been eased in hope individual civic responsibilities will be fulfilled by the masses without leaving the authorities in a lurch; the restrictions on the movements may be eased too beyond local areas.

In light of these developments, there are considerable, heightened activities at petrol stations, which mean the demand for fuel could go up in the coming weeks; an exponential increase, however, is unlikely as it usually takes time to get used to the New Normal.

In the United States too, the world’s largest crude oil consumer,  the vaccine rollout is in full swing across the states and the demand will pick up as we go into the spring; the inherent positive effect of the season will be a factor that naturally lifts up the mood of the people in the northern hemisphere.

The growth in India and China is picking up and the economies are growing. That means the demand for crude oil can only grow as transport and production activities accelerate.

Since both countries bought crude oil on the cheap and stored on a massive scale during the oil crash in 2020, they may tap into them when the prices go up beyond a certain point; in this context, the inbound movement of oil tankers to the ports cannot be the only measure that determines the national demand of each country.

At global level, there are indications that the OPEC+ will stick to its current production level while Saudi Arabia maintains its voluntary cut of 1 million bpd; Russia will not the rock the boat, but may win some concessions, as it did on two previous occasions, to increase its own production by a moderate amount.

In short, the Saudi position of exercising caution rather than getting caught up in an emotional wave, is already gathering momentum in the corridors of OPEC+ power; in response, the forthcoming meeting of the OPEC+ in April, in all probability, is going to be a foregone conclusion.  

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