MEXICO CITY, MEXICO / ACCESSWIRE / May 26, 2020 / The oil industry is going through what has unanimously been described as the most calamitous period in its history, hitting an unprecedented low in April with sub-zero prices for America's benchmark, West Texas Intermediate (WTI) futures contracts. "While it is clear that the current shock is the result of the global pandemic, it remains uncertain when and how much oil prices will recover. This is linked to the fact that governments worldwide have no clear indications as to how long people will need to comply with strict restrictions on travel, work arrangements, and social gatherings," says acclaimed forex broker Pablo Soria de Lachica. "It may seem that extremely low oil prices are a good thing, but this most precious of commodities is truly the engine of global growth, and the industry crisis is likely to have massive repercussions for the world's economy in the foreseeable future."
Just as oil fuels the modern world, so it needs healthy economies to ensure the continued operation and prosperity of producers, but even the most optimistic projections do not envision any return to normality until late 2021, Pablo Soria de Lachica notes further. The oil glut is likely to keep prices low for quite a while, straining the national budgets of producing nations and possibly causing geopolitical tensions, which tend to affect trade relations. Furthermore, increased government indebtedness impacts adversely the implementation of social and environmental policies, often exacerbating domestic problems and hindering economic growth. In a report following the price crash in April, Bloomberg said, "Despite the OPEC+ deal to cut 10% of global production, […] the oil market's crisis is worsening. The rout will send a deflationary wave through the global economy, complicating the task facing central banks trying to keep economies afloat as the pandemic continues to paralyze business and travel worldwide." Similar comments were made by Bill Dudley, former president of the New York Federal Reserve Bank, who spoke to research and analysis portal Resilience on the issue of government spending to contain the healthcare crisis. "It's possible that the response to economic shutdown over the longer term could have an inflationary consequence, but in the near term, it's very definitely on the disinflationary/deflationary side," Dudley said.
Given how interconnected oil and the global economy are, an upheaval in one inevitably touches the other, Pablo Soria de Lachica says, adding that the prospects of both are currently dependent on the end of the pandemic and a return to some level of normalcy in economic activity. In April, Fitch Ratings revised downward its estimate for global GDP, citing as reasons "the spread of the pandemic and the actions necessary to control it." The agency said in its updated forecast, "We now expect world economic activity to decline by 1.9% in 2020 with US, eurozone and UK GDP down by 3.3%, 4.2% and 3.9%, respectively. China's recovery from the disruption in 1Q20 will be sharply curtailed by the global recession, and its annual growth will be below 2%." According to Brian Coulton, chief economist at Fitch, "The forecast fall in global GDP for the year as a whole is on a par with the global financial crisis, but the immediate hit to activity and jobs in the first half of this year will be worse."
Pablo Soria de Lachica graduated from Universidad Tecnologico de Mexico (UNITEC) with an MBA, going on to specialize in international trading and ultimately become one of the most prominent forex experts globally. His extensive experience allows him to maximize profits for his clients by combining professional guidance and educational projects. He is currently collaborating with Kartoshka - a company bringing the latest technologies in sales, telemarketing, and customer support.
Pablo Soria de Lachica - Foreign Exchange Specialist: http://PabloSoriaDeLachicaNews.com
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SOURCE: Pablo Soria de Lachica