Psychological booster for crude oil markets: covid-19 infections in India in decline


India covid-19 recovery

The crude oil price dipped on Thursday and it was solely attributed to the weaker-than-expected US economic data that in turn made the US dollar stronger.

The mood in the markets was not lifted up, even after a relatively successful summit between President Biden and President Putin in Switzerland; that was not something expected either – at least by the media.

The talks over the JCPOA, 2015 Iran nuclear deal, meanwhile, are continuing in Vienna, Austria, in its sixth round and the Iranian delegation was much more hopeful about an agreement yesterday, as never before.

This could have been a trigger to push crude oil price downward on Thursday, something that is still continuing on Friday.

Both WTI and Brent went down by 1.32% and 1.572% respectively before the markets closed on Thursday.

Despite the palpable uncertainty in the crude oil markets, there is a glimmer of hope for the battered Indian economy: the Coronavirus infections are in decline and so are the deaths.

Since India is the world’s third largest consumer of crude oil, analysts believe that the demand will grow steadily up, defying local price rises of oil products in the past few weeks.

In proportion, the oil imports by India will be back on track, especially from the Middle East. Since the strained relationship between India and Saudi Arabia is finally on the mend, an accelerated boost from India will reflect well on the producers in the region.

If Iran is allowed back into the international oil markets, the wheels of oil power can move in unexpected directions, though. The GCC, Gulf Cooperation Council that consists of mainly Sunni Arab nations in the Middle East, has already raised concerns over a nuclear deal with Shite Iran, without proper regulations in place; Iran recently referred to them as ‘West Asian regimes’.

The US, meanwhile, must be under pressure from yet another West Asian player over the issue – Israel, the arch enemy in the eyes of Iranian conservatives.

Iranians are voting today to elect their new president and a low turnout is a major concern, not only for the selected candidates, but also for the Supreme Leader.

Although the outcome appears to be a foregone conclusion, the president-in-waiting may move away from hard line policies when it comes to international politics and economic matters, despite hailing from a highly conservative background; increasingly optimistic mood of the Iranian delegation involved in the talks over the JCPOA in Vienna reflects a potential change in direction in international  policies.


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