MEXICO CITY, MEXICO / ACCESSWIRE / June 9, 2020 / Although the world is working towards a carbon-free energy future, it is still overwhelmingly dependent on oil, and this is likely to remain the case for decades. Given its crucial importance, this commodity has long been closely intertwined with the global economy, affecting not only markets but also national and international policies. "The oil industry has known many ups and downs, but what it is experiencing at the moment is unprecedented," comments renowned forex broker Pablo Soria de Lachica. "The global pandemic has all but annihilated crude demand, further upsetting a market that was already struggling in the face of an oil glut. The world economy will inevitably recover from the current slump, but a return to the previous normal remains in doubt, and the latest oil industry shock is likely to have a longer-term effect on energy markets."
The very importance of the ‘black gold' has led to its price being "disproportionately hit" by the pandemic and the resulting collapse in economic and social activities, Goldman Sachs analysts said in a recent research note. Looking at the broader picture ahead, they added, "Not only is this the largest economic shock of our lifetimes, but carbon-based industries like oil sit in the cross-hairs as they have historically served as the cornerstone of social interactions and globalization, the prevention of which are the main defense against the virus. […] The ultimate magnitude of these shut-ins, which is still unknown, will likely permanently alter the energy industry and its geopolitics, restrict demand as economic activity normalizes and shift the debate around climate change." The oil industry is accustomed to upheavals, but it has never experienced such a staggering drop in demand, which has undermined its ability to adjust and triggered a spill-over effect on the broader energy sector, Pablo Soria de Lachica says. He goes on to explain, "In response to reduced consumption and shrinking revenues, energy producers and distributors are mothballing investment projects and various efficiency initiatives to conserve funds. This may help them weather the crisis, but it raises concerns over future capacity and infrastructure, including renewable power programs."
In a recent publication, the International Energy Agency (IEA) said, "The oil world has seen many shocks over the years, but none has hit the industry with quite the ferocity we are witnessing today." The IEA also expects the oil price crash to reverberate throughout the energy sector, citing natural gas as particularly vulnerable due to the close ties between the two commodities. In summarizing the situation, the agency wrote, "Changes in oil markets ripple across all parts of the energy sector, with implications for a range of different fuels and technologies. A sustained period of low oil prices would affect the prospects for clean energy transitions, easing some aspects of this transformation - such as the removal of fossil fuel consumption subsidies - while complicating others."
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
Pablo Soria de Lachica Comments on the Possibility of a New Financial Crisis due to Oil Collapse: https://news.yahoo.com/pablo-soria-lachica-comments-possibility-200000177.html
Pablo Soria de Lachica Explores the Potential Impact of 2020 Oil Crisis on the Global Economy: https://finance.yahoo.com/news/pablo-soria-lachica-explores-potential-141500846.html
SOURCE: Pablo Soria de Lachica