- Conflicts in the Middle East, namely in Syria, Lebanon, Yemen and Iraq, and Europe’s refugee crisis arising from the war against Daesh is adding to the negative outlook.
Khaleej Times
Editorial
No one’s blinking as yet in this war over oil. A political battle is being played out over the business of ‘black gold’ between the West led by the United States and Opec headed by the world’s largest producer Saudi Arabia, which is bad for the global economy faced with multiple crises. The Gulf country wants to continue its sway over the market and US shale producers have been hit the most. Some have gone out of business, while others are struggling to hold their ground as the Saudis continue to keep up production levels. There’s Iran waiting in the wings to enter the market when sanctions are lifted, and the scenario for oil producing nations looks more gloomy next year. On Monday, Brent crude fell to just 17 cents above $36 a barrel. This breached the post-financial crisis low it set in December 2008. Some experts predict it could drop further to $30 a barrel or less next year ”before it recovers in a meaningful way”. Others paint an even bleaker picture, and say it could fall to an abysmal low of $20 a barrel. Excess production and competition, like we mentioned earlier, are the main factors for this drop. Supplies are already at record levels. Reports say stockpiles in the US surged by 4.8 million barrels last week, another reason for the record slide in prices. Demand could also be hit following a post-interest rate rise jump in the dollar. This means oil will be more expensive for buyers outside the US, who could continue buying from the Saudis and other Gulf nations. China has slowed down despite the government’s best efforts, and cannot sustain its growth spurt of two decades.
Conflicts in the Middle East, namely in Syria, Lebanon, Yemen and Iraq, and Europe’s refugee crisis arising from the war against Daesh is adding to the negative outlook. Oil’s not well with the world. This year has been bad.
