As Saudi
Arabia cut oil price for Asian region on the grounds of faltering demand,
Reuters reports more bad news for the market.
According to
the report, Oil importers in Vietnam have been compelled to offer bonus to
retailers to buy oil in order to clear their mounting oil stocks at ports.
The lack of
demand is highly correlated to the lack of industrial activity and movement of
traffic owing to Covid-19, despite the crisis being handled very well – with fewer
than 5 deaths.
If Vietnam,
a country that was left relatively unscathed despite being close to the epicentre
of the pandemic, China, could not recover fast, analysts believe, the countries
that have been badly hit in the region will struggle to revive their economies
in the coming months.
Having hit
by waves of unpredictable events, the big oil producers in the Middle East will
be forced to focus on diversifying their economies while knowing the danger of
relying on just one source for generating revenue.
Since the
intended objective of the production cut by the OPEC did not materialize, the
producers need to come up with an alternative response in the light of post
Covid-19 realities.
In the end,
it all boils down to the age-old humble truth – seesaw of demand and supply.
