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THE oil picture today is one of the best, with the best maestro managing every move and fine tuning along with the well experience players. They together moved the oil price to close to $71 per barrel, without making much noise about knowing what they are doing today and tomorrow, and making sure everybody is happy with the supply that is available whenever required. Will the current oil level be the cause for inflation until the world becomes free of COVID-19? Or will it be faced with another wave of a new form of slow world economy again?
Meanwhile, the USA, China and Europe are emerging with a spending spree. This is good news for all, particularly the oil exporting countries in OPEC and its partner Plus. Having an oil price above the level of $70 will greatly help in reducing the deficits by about 30-40 % as well as reducing their borrowing from outside international banks. We hope we learn necessary lessons to continue drifting away from being dependent on oil and sincerely look for another alternative to replace oil. This is because oil will not always remain at the current level of $70 and above. The party will not last long… we have to search for another source of income for all Arabian Gulf states.
The delay in Iran and USA reaching an agreement is causing the current surge in oil price. It prevented the pumping of more oil into the markets, perhaps contributing to the strengthening of oil for a while. Of course, the surplus is no more, thanks to OPEC Plus’ full adherence to production cuts and USA shale oil owner’s policy to keep production low while generating net cash on a daily basis for the last three months. The combined factors added much force to oil price’s stability and strength. Are we going to benefit from the good news of better oil prices? How are we going to be ready for the next step in terms of creating jobs for more than 25,000 new graduates entering Kuwait market? It is a hard challenge to meet but are we really thinking of doing anything? Improvement in the oil price is good news … We should not abuse it.
By Kamel Al-Harami Independent Oil Analyst