Weekly crude oil price, that showed an upward trend
up until March, 2021, has suddenly turned downward, when 3-point-moving
averages are taken into account.
This is not something that analysts anticipated,
especially when there are clear signs of global demands going up. Moreover, in
the US, there were strong indications of an economic recovery in proportion to
the scale of the vaccine rollout.
The increase in the crude oil output by the OPEC+,
despite done under global political pressure, also signalled optimism on the
part of the cartel that the demand would finally be on the rise.
In addition, in China, the world’s second largest
consumer, the economy shows a steady growth and the crude oil demand is going
to go up at a faster rate in the coming months.
The reliable positive news on multiple fronts
clearly eclipsed the negative sentiment that stemmed from the upsurge of new
Coronavirus infections in Europe and Asia. As a result, there was no dramatic
fall in oil price, a repeat during the same period last year.
In this context, it is hard to figure out what
causes the downward trend in the price of crude oil, unless you take into
account the Iranian factor.
Iran and the US are finally talking to each other
through intermediaries and at least this prospect was unimaginable a few months
ago.
The two sides are still poles apart; the stakes,
however, cannot be higher for both sides for not coming to a mutually
acceptable compromise.
With the presidential elections in Iran just two
months away, on one hand, Iranians cannot afford to lose a moderate statesman
in their hour of need. On the other hand, the US cannot let this opportunity slip
away before a hardliner takes up the reins in Iran.
Perhaps, the oil markets know what would happen to
the supply side of the oil equation in the event of the 2015 nuclear agreement
being revived – the arrival of significant amount of crude oil to the markets.
This is the only factor that could account for the
fall of the price of crude oil in these few weeks.
