Macro Moves

Crude oil: Price war vs Global Demand

Created on 03 Apr 2020

Wraps up in 3 Min

Read by 4.8k people

Updated on 01 Oct 2020

US President says that Crude Oil price war may be over.But, what’s exactly going on with oil and oil producers?
There’s a basic difference between a ‘need’ and a ‘want’. Needs are necessities that are required no matter what. On the other hand wants are not necessities but, considered by the individual as a necessity. So to understand, wants are like ‘you don’t need but still you want them’. Here we are not trying to teach you a lesson of psychology but drawing your attention towards crude oil. A lot of drama has been going around crude oil for the last few weeks. There is a price war going on which led to the decrease in oil prices to 18-year low! But now this war may end soon and prices would be back on track. Thanks to Coronavirus. But, this drama was shown the world something that they had not expected. Read on.

Truce Finally?

When the trade started globally on Thursday, American President Donald Trump informed the world that he had a word with his Russian counterpart Vladimir Putin and discussed the crude oil prices. He said that the price war could end soon and Russia could soon reach a truce with Saudi Arabia over the ongoing crude oil price war. Of course, the investors tried grabbing the opportunity with both hands and hence the crude prices in the market surged by 5% in the morning itself. This announcement was like music to the ears of a lot of investors. But, the question is that will Russia and Saudi Arabia reach a truce, or will the two biggest oil producers continue to fight over the oil prices? Because starting a price war is easy but ending it will take some compromise from both ends.

The Other Side

While Saudi Arabia and Russia are probably trying to reach a common point to end the price war, Riyadh has jumped in. Riyadh has announced that it would increase the exports in May to a record high of 10.6 million barrels per day. With this, the crude oil drama has taken a weird twist.

Imagine you are not at all hungry but three different persons are offering you food. However attractive the offers may seem, but the problem is that you’re not hungry and hence you won’t have any of it. Would you? An ailing oil market was hit by a price war and now a new player has jumped in to show that it was not supposed to be ignored. All this, with the world not needing oil at the moment due to pandemic.

World Wants Relief, Not Oil

You must have seen those memes getting viral on social media about the earth healing itself while the pandemic is showing its effects. With the Coronavirus affecting the entire world so badly, economies are suffering like anything. Life has almost come to a halt with lockdowns and curfews. Amongst all this, oil demand has declined by more than 23% globally. With the reduced rates, countries are also trying to pile stocks but there’s a limit to this as well. Now, for the climax of this crude oil drama we can only wait and watch.

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Deb P Samaddar

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If people could be named after idioms, Deb would be called "I'm all ears." His brain is a storehouse, ever overflowing with derelict information. So, while most things he talks about are as useless as occasion-less greeting cards, everything he writes has the potential of bagging you multiple diplomas!

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