Crude oil price rises unabated despite the tension in the Middle East
The conflict in the Middle East involving the
Palestinians and the IDF, the Israeli Defence Forces, is depressing to watch as
innocent lives are lost on both sides with substantial damage to
infrastructure.
It’s unfortunate that the fighting broke out in the
run up to Eid, the most important festival for the Muslim across the world.
Judging by the way the previous intense flare-ups
ended, the latest conflict will also be brought to a halt by the peace-makers
in the region, especially Egypt and Qatar; both countries are pretty active in
order to bring the fighting to an end.
As this is the most feasible outcome in the coming
days, the crude oil markets have not been affected by the ongoing conflict;
markets are hopeful that it will not drag on for weeks, something that both
sides involved cannot afford let happen.
As far as crude oil markets are concerned, however,
there is plenty of good news on the horizon: the protracted talks between Iran and
the signatories to the JCPOA, the 2015 Iran nuclear deal, may produce an
encouraging outcome, according to reliable sources – after all; Saudi Arabia
and India, the world’s third largest importer of crude oil, have finally
settled their differences in the middle of a great health emergency with India
getting a steady supply of liquid oxygen for six months from the region; Saudis
have gone the extra mile by reducing the price of crude oil for Asia and
promising to provide the region with the fully supply for June – at a time of a
crisis; they are noble gestures on the part of the Kingdom.
The generous nods from Saudi Arabia come at a time
when its own economy has just begun to recover; the Saudi economy had been
suffering for years due to falling oil prices and the outbreak of the
Coronavirus pandemic made things worse for the Kingdom. In this context, the
Saudis deserve praise from the Asian region for the moves at a very difficult
time; India has already shown its appreciation.
In another development as far as the crude oil price
is concerned, the API – American Petroleum Institute - have made a forecast of
a substantial crude oil draw for the week ending May 7; it’s about 2.5333
million barrels.
The OPEC+, meanwhile, is hopeful they got their
strategy right; the demand for crude oil is going go up as the global economic
growth picks up; the jet fuel price has already gone past the break-even mark
in proportion to the positive sentiment across the wider airline and travel
sectors.
In light of these developments, the crude oil price
will keep rising at a steady pace with sustainability remaining intact.
