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Oil vs. Coronavirus – Is This The Real Crisis?

In the middle of a global health crisis, the most discussed economic topic is the biggest polluter in Earth – oil. Seems that it is an economic disaster that the oil price now hovers under $50/barrel. A bigger economical problem than other sectors crashes (travel, tourism, industrials) – or bigger than the terrifying unemployment rates starting to show all over the board.

The Markets section on Reuters showed on April 10’s Good Friday, out of the first 34 posts, 12 were about the oil production cuts within OPEC+ – and only 4 about the global healthcare status. It looks like oil is much more damaged that the population – and it shows where US’s economic focus lies in the middle of one of the worst economic crisis ever recorderd. Economy comes first of course – with lockdowns and without jobs, Americans’ loves will take a big hot. But oil?!

The big OPEC nations are of course focused on oil prices – with their slightly or un-diversified economies, they are heavily reliant on oil income. It is estimated that they globally loose about 1 billion USD in revenues per year for every 10 USD drop in oil prices. I can understand that. What I do not understand is why this is taking the center stage in the economic news. Especially since these nations are still playing a long oil game by themselves – for example it was reported that the Saudi Arabia sovereign fund built quietly a more than $1 Billion position in 4 main European oil produces, taking advantage of their low share prices. In any case, they seem to win from the situation.

It might be the time now to focusing on the more pressing topics – stabilizing the virus growth, helping their population to come back to normal, support employment and ramping up the healthcare support. All the things a state should do for their citizens. But hey, maybe it is only me….

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