Omicron surge in Europe takes its toll on crude oil price

omicron surge in Europe


The price of crude oil started falling on Monday, clearly indicating the impact on the demand by the surging Omicron across Europe.

It is a body blow for a range of industries that had been waiting to breathe a sigh of relief during the Christmas period, having immensley suffered almost for two years due to the pandemic.

With the Netherlands in the lockdown, judging by the surging rate of infections and the lack of corporation from a significant section of the populations in containing it, citing the ‘freedom’, it is only a matter of time before the rest of the major European nations falling in line – inevitably.

Although such a move will be politically suicidal for some European politicians, the evolving circumstances will leave them with few palatable options.

Although the price of crude oil showed an upward trend, perhaps buoyed by the falling US crude inventories, the surge in infections by the new variant of the Covid-19 has clearly dampened the positive sentiments.

Investors and traders have come to realize that the control of the new wave of infections is beyond the grasp of politicians – and their optimism to the contrary.

Of course, the new wave of the pandemic will be controlled by iron-fisted approach at some point, when the disease runs its course – in the end. Unfortunately, our experiences in this regard during the last two years show that the recovery time is painfully long, potentially taking months.

On the other hand, the acrimonious activities involving Russian and China with the west show no sign of abating. On the contrary, they are escalating on many fronts, leaving many roadblocks on the way to a collective economic recovery.

Crude oil markets have never been able to crawl out of the shadows of mutual distrust that exists between major global powers; the falling price of crude oil, even when there are indications in support of a recovery in demand,  shows the lingering anxiety of investors – and traders.

In these circumstances, the crude oil markets are going to suffer in the long run, before making a full recovery sometime next year - because, the world still needs oil.

 

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