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Showing posts from June 12, 2022

Oil price dropping by 10% in a week: has the fear of recession taken its toll on it?

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  The price of crude oil went down more than 10% this week, perhaps due to the fears over recessions that could sweep over the top global economies in the coming months, if confirmed by the forthcoming GDP figures for the Q2, the second quarter. Since two successive quarterly contractions spell the much-dreaded word, recession, crude oil markets appeared to have exercised caution, emulating other major markets. In addition, the threats by the Biden administration against major oil companies over hefty profits at the expense of the impact on the economy and his planned visit to Saudi Arabia in July may have played some role in the anxieties that prevail in the markets at present. With the cost of living on a steady upward march, the Western governments failed to inhibit the trend by adopting a catalogue of measures, ranging from duty cuts on fuels to offering subsidies to beleaguered households - all to no avail. Although the fluctuations of the US crude stocks that usually used to reli

President Biden's Trip to Saudi Arabia amidst Rising Oil Prices: will it break the ice?

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With the inflation skyrocketing, the Western politicians have been forced to occupy the enviable space between the rock and hard place, when the spectre of recession appears just on the horizon. The rise of interest rates and the inevitable sequence of events triggered off by it, do not make pleasant reading for those who hold the levers of power either: the Federal Reserve, for instance, resorted to the biggest rate hike since 1994; in the UK, the Bank of England raised the interest rate by 1.25% - the fifth increase in a row. Amidst lingering uncertainty, the cost of fuels is on a steady upward march with no let-up: as of 09:50 GMT on Friday, the price of WTI, Brent and LNG stood at $118.50, $120.69 and $7.45 respectively - a steep rise by a few notches relative to what they were at the same time, last year. Neither the negative sentiments that echo the markets nor the modest US crude build in the past two weeks, brought down the price of crude oil as expected. On the contrary, it we

High Oil Prices: oil companies fear it's not sustainable!

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  It's all about the age-old adage, after all; what goes up, does come down - in the end. The key players in the oil and gas industry, at boardroom level, now feel the current oil and gas prices are not sustainable, because the damage to the global economic growth is already there for all to see.  Harish Madhav, the CEO of Oil India, for instance, firmly believes that crude oil at $120 is not sustainable in the long run; he expect it to come down to $80 - $100 over medium term. Mr Madhav, who heads a major oil company in the world's third largest consuming nation, is fully aware of the trials and tribulations of the industry in the country at present; the inflation, as in other major economies, is rising and its impact on the economic growth is obvious; the Indian government slashed the taxes on oil and gas at the expense of vital revenues for the coffers in order to keep the prices at the current level - as the last resort. Although India too got on the bandwagon of releasing