Crude Oil Markets: the lingering ominous threats

 

looming threat against crude oil markets on many fronts

The price of WTI and Brent recorded $96.35 and £102.61 at 07:30 GMT respectively on Monday morning. With even the vital energy markets not being insulated in the current conflict, it can even go further up dramatically unless sanity prevails in the coming days.

The struggle in many global economies, including those of the richer nations, was palpable on many fronts when the price of crude oil hit above $80, a few weeks ago.

We can just imagine the impact on the very global collective economy with the price of crude oil at these prices. If you add the uncertainties that stem from restricted air travels, curtailed global financial transactions and above, all the mushrooming military threats, it can only get worse – and uglier.

As far as the major European economies are concerned, most of them rely on the gas imported from Russia. Even Qatar, the largest producer of the LNG, Liquified Natural Gas until recently, said a few ago that it cannot be a substitute for Russian gas

This is not the best time to find alternative energy sources; nor are there many to fall back on; getting the logistics on track is easier said than done, especially when the military threats – and counter threats – grab headlines in the current circumstances.

The ongoing situation has the potential to cause serious ripples in the OPEC+ too, in which Russia is a key member. If the West insists on not dealing with Russia, the cartel will certainly be in a difficult position.

In another development, as the Ukraine crisis went full blown on Thursday, the prospect of reviving the JCPOA, 2015 Iranian nuclear deal, went awry again.

In the absence of the Russian influence, the momentum of reviving the deal was dealt a big blow; Iranians, who were hopeful of a breakthrough, appear to be accepting the new ground realities.

All in all, the crude oil markets are, understandably, edgy, because it is not just the supply side that is at stake, but the demand side too as people – and industries too, if the situation gets out of hand - tend to use less fuel to cut down on their bills.

 

 


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