Showing posts from February 21, 2021

Rising Oil Price: world's third largest consumer feels the pinch

  The rising oil price has already affected the world’s third largest consumer of crude oil, India, both economically and politically. During the last six months, fuel price has gone up by a staggering 23%, taking its toll on the freight operators with a significant rise in the cost of rentals. Since most of the internal transport of goods depend on trucks on   networks of highways in this vast nation, the cost of goods for ordinary people is going to skyrocket in the far away regions, if the fuel hike continues at this rate – in proportion to the obvious increasing transport cost; India population is mainly rural and how they live – and spend - really matters when it comes to its economy. Indian economy that showed an impressive growth for decades suddenly came to a screeching halt due to the pandemic; for the first time in 70 years, it went through its worst recession. Although, it is showing the signs of a feeble recovery, the rise in the price of fuel on recent scale could

Oil Price: does this the graph play a major role in its rise?

  Oil price is rising and even an inventory hike did not affect its elevation to the current level this week. It went down at the early hours on Friday, most probably after the news about an air strike by the US inside Syria, targeting a group of fighters supported by Iran. Although the attack did not have the potential to trigger off a regional conflict, it affected the market sentiment in Asia in the early hours – hence, the drop in price. Since its impact died down by Friday evening, the oil price may rise again when the markets are open next week. One of the main catalysts for the buoyancy in the crude oil markets, in this context, seems to be the forecast by the EIA, the US Energy Information Administration that shows a steady decline in US crude production. Ban on fracking in Federal lands only makes it more relevant as far as crude oil futures are concerned. The analysts at the OPEC+ may be dissecting this graph as if it was a live specimen in order to read into the cr

Oil Price: dynamics of the crude market with Iran back to the fold

  Although the hardliners of the Iranian administration are determined not to revive the nuclear deal signed in 2015, the moderates, led by President Rouhani, appear to be getting their way. On the part of the US administration, the indications are that they will do everything to revive the deal even if that means caving into some of Iranian demands, if not all. The bone of contention will be over how to compensate for the loss of revenue by Iran due to crippling sanction imposed by the Trump administration. A plane load of cash this time, however, as it happened in 2015, will not be political candy that can sell very well to the American domestic audience regardless of the political affiliations. As far as Iranian oil industry is concerned, the moves are underway in hope that sanctions will be lifted in the near future. By reading between the lines of their official communiques, both the US, European Union and other stake holders are keen on getting Iran back to the fold; the

Oil Price: next OPEC+ meeting on March 4 - will Russia and Saudi Arabia see eye to eye on production cuts?

  In spite of the rise in oil price, defying the forecasts that said otherwise, Saudis have been urging the members of the OPEC to be cautious. We do not know for sure whether the Saudis knew the dip in price this week in advance – by instinct or from a model that the rest of the analysts are not aware of. Up until this week, Saudi Arabia got it calculations right and they deserve the credit for it: their strategy worked perfectly well and OPEC members could breathe a long, collective sigh of relief in proportion to the rise in oil price. In the past OPEC+ meetings, Saudi Arabia was instrumental in bringing down the crude production by the members of the OPEC+, while dwarfing the murmurs that favoured the polar opposite.   Then, they went even further on their own with a cut of 1million bpd for February and March. In short, the global output was substantially slashed. Oil price, meanwhile, rocketed as a result and the OPEC members could not believe their luck: having faced with

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