We should not expect much improvements in the oil prices in the coming future, especially with COVID-19 virus around and lack of any cure for it currently. The world, while being captured by coronavirus, must commerce with little overseas activity and more domestic shopping and buying activity until further notice.
Even the Hurricane Laura, which hit US-Gulf refineries and caused a stoppage of export of more than three million barrels of crude oil and five million barrels of petroleum products, did not impact the core US crude oil price which remained solid at $ 43 a barrel and without any kind of panic buying. This left the main oil price indicator – Brent indicator – at $ 46 per barrel which is a safe level.
This will lead us to new challenges in our automobile industry to face the competition presented by Tesla , the maker of electric cars with value reaching above $ 400 billion more than any other automobile industry globally and with shares worth more than $ 2,300 per share. Tesla will remain the biggest threat to the automobile industry that does not switch to electric, and will leave us and other oil producing countries at a limbo, as it would indicate a shift away from oil, motor gasoline and diesel consumption.
The recent events of Hurricane Laura and the quintupled rise in Tesla’s market value in the US market represent a positive indicator of the switch in oil industry trends. This only means oil price will remain static without going beyond the levels of $ 50 and $ 60 seen in the previous years.
This is the sad reality of the oil market. It is not static.
By Kamel Al-Harami
The views/opinions expressed in this article are those of the author and do not necessarily reflect the views and opinions of Al Bawaba Business or its affiliates.
