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Austria newspaper: World no longer affected by Gulf region’s oil instability

Oil barrels [File photo]
Oil barrels [File photo]

“In case black gold can no longer be transferred across the Gulf Region, large volumes will flow from the global oil markets,” predicted Nitesh Shah, director of research at Wisdom Tree, in an article in the Austrian newspaper Wiener Zeitung.

According to the article, oil markets seem immune to the events of the global political system from the ongoing incidents in the Gulf Region, which is vital for global oil supplies, covering 34 per cent of global oil supplies and 48 per cent of global reserves.

However, the deceptive calm of the oil market may explode at any moment, and it will not be isolated from sudden political events, according to the report.

The article pointed out that the events which occurred after the drone attack on oil facilities in Saudi Arabia did not primarily affect the decline in oil prices and the market seems to be profoundly calm.

The article also pointed out that the attack on Saudi oil has been the most critical incident that exploded the oil market, and has been astonishing in the short term as far as its impact is concerned.

The calm prevailing in the oil markets is the result of investors closely watching the proxy conflict between Saudi Arabia and Iran, which threatens with the outbreak of all-out war in the Gulf region, considered Nitesh Shah, director of research at Wisdom Tree.

READ: Pentagon chief visits Saudi Arabia as tensions simmer with Iran

The oil market takes into account the imports of Saudi weapons, which cost $ 70 billion last year, and the reinforcement of Riyadh’s position as the world’s largest arms importer.

Shah pointed out that there is a high risk of escalation between Saudi Arabia and Iran, which will affect the stability of prices.

Amid the global trade war, markets are currently focusing on potential oil demand.

The International Energy Agency (IEA) expects oil demand to rise to 1.0 and 1.2 million barrels per day in 2019 and 2020.

Just one year ago, the IEA had expected the production of 1.4 million barrels per day in 2019, an increase of 0.4 million compared to the current predictions.

According to oil expert Nitesh Shah, it now appears that the decline in demand for oil is small compared to the risks of disruption of oil supplies. Nevertheless, it is more likely that large volumes of global markets would flow, in case the black gold can no longer be transferred across the Gulf Region, which foils the current demand prediction at 0.4 million barrels per day, according to Masr Alarabia news website.

READ: Iran accuses US, Israel, Saudi Arabia of targeting its oil tanker in Red Sea

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AustriaEurope & RussiaIranMiddle EastNewsSaudi Arabia
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