Crude oil price rises unabated despite the tension in the Middle East


Crude oil price on Wednesday

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.

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