Oil price does not seem to be dependent on the
Coronavirus news any more whether the latter comes in the form of spikes, waves
or even the formulation of new vaccines.
The price remains strong defying the factors that
could otherwise have brought it down significantly.
The investors have finally realized that the world
will deal with the pandemic at some point - or new variants will be less deadly
than what we saw at the beginning of the year.
A stable oil price close to $50.00 a barrel is good
both for the consumers and oil producers for several seasons.
The consumers can keep their fuel bill at a manageable
level at a very difficult time when uncertainty looms on many fronts.
As for producers, especially in the Middle East,
they can just balance the books and minimize the social unrest in the hope
things will improve; there is already unrest in Iraq, the country with massive
oil reserves, next to Saudi Arabia, over its currency devaluation – the worst
ever.
In addition, the livelihood of millions of migrant
workers from Asia which depends on these economies can be saved; their
remittances have been an economic lifeline for the countries where these
workers come from.
In this context, collapsing oil price is in nobody’s
interest – in the long run. Some may rub
their hands with glee at the pump in the short run, but negative consequences far
outweigh the outbursts of misplaced sentiments in a matter of months.
