The IEA, the International Energy Agency, caused
something more than a stir in the oil markets yesterday when it said the kind
of things that the investors in the sector should pursue if they really want to
see net-zero-goal by 2050; it says this year should be the last year for
investing in the oil sector!
Of course, it has come under immense criticism for
this aspiring goal and the corresponding deadline, which most in the sector,
believe as a line drawn in the sand.
Despite the debatable ambition, the demand for crude
oil is growing as the US and some parts of Europe are reaping the benefits of
the accelerated vaccine rollout; the industries are back at work in full swing
and vehicles are back on roads.
Although the grim situation in India, exacerbated by
Cyclone Tauktae, shows no sign of a respite, the investors are hopeful it will
be back to normal in due course, as did in the US at the beginning of the year;
on its part, India is also trying to mimic the US and the UK in getting vaccine
rollout on track, despite the logistics being very challenging in a vast
country of its size.
The demand of crude oil in India, for obvious reasons,
is very low and the refineries have cut down on imports. Saudi Arabia, however,
a main exporter to the region, brought the price down in order to help Asia in
its recovery efforts against the pandemic.
The fall of price, on the other hand, can be an
incentive to the region too to buy more oil than they really need in the short
run and then store in for a rainy day; the region has done this before during
the first wave of the pandemic, when the prices nosedived.
On another positive front, according to the latest
reports, the oil glut that has been building during the pandemic, has almost
gone down to the pre-pandemic level.
In addition, there are signs that a ceasefire
agreement will be reached between the warring factions in the Middle East,
brokered by Jordan and Egypt that still maintain steady diplomatic relations
with the Jewish state.
In short, the positive sentiments in the oil sector
are strong enough to eclipse the anxiety caused by the latest insights by the
IEA.
