Dr Nakhle comments on the impact of the rise of Delta variant on global oil market trends. Prices are now going in the opposite direction to what was predicted only a few months ago when everybody was talking about a tight market, pent up demand and economic growth roaring back with a vengeance by the summer. Still, where we are today around $70 for Brent, is a long way from the beginning of the pandemic, so that’s positive. In terms of where we’re going next, for the rest of August and maybe well into September, uncertainty and volatility will continue as long as we have countries recovering at different speeds and a divided outlook on stimulus and commodity prices.
With respect to demand projections for the second half of 2021, what’s happening now is a realisation in the US, the UK and Europe, that at some point we have to learn how to live with the virus. There is also still some resistance towards vaccination, particularly in the US. The positive news is that developed economies, have recently agreed to support poorer countries in their vaccination roll outs. Without this, the uneven global recovery we have today will be accentuated and the virus will not come under control.
She further comments on the recent hostilities in the Gulf. The new Iranian President is trying to convey a message of power to the rest of the world. Maybe this is their way of negotiating better terms to the nuclear deal if they want to stick to it. But the impact on the market is minimal. The focus remains on demand, not supply, and Iranian barrels have been returning gradually anyway. In terms of geopolitical premium, you don’t feel that in a market which is well supplied while uncertainty around demand remains.
Watch the full discussion:
“Oil Intensity: The curious relationship between oil and GDP“, Christof Rühl and Tit Erker, May 2021
“Global Economy and Energy Markets Weekly Commentary – 1st Aug ’21“, Christof Rühl, Aug 2021