UAE - Killer virus does what Biden couldn’t

(MENAFN - The Arabian Post) By Matein Khalid Brent crude is now down 11% to 73 and West Texas Intermediate (WTI) is now down a shocking 13% at 68. President Biden may wish to remember the old Persian proverb–do not wish for anything too badly. You may just get it–. Biden had green lighted a release from the American Strategic Petroleum Reserve (SPR) last week but oil traders actually bid up Brent crude from 78 to 82. The global oil market obviously concluded that the Big Enchiladas of black gold were OPEC+, which means the House of Saud/Kremlin and not the Biden White House whose reputation for global toughness hit a new low after it allowed the Taliban mullahs to seize Kabul without a fight. Yet the killer virus from South Africa has done the job that the SPR release from five oil importing countries failed to do last week. It has ignited panic in the global crude oil wet barrel, spot and futures swaps markets on a scale eerily reminiscent of their ghastly plunge in April 2020. This is really the last thing the economies of the Gulf oil exporters need, especially at a time when the US dollar has surged and Fed monetary tightening can devastate the colossal debt loads accumulated in the past decade. The plunge in Brent crude could persuade the OPEC+ conclave on December 2nd to not increase its planned 400,000 output rise despite political pressure from Washington on its Gulf allies. This means the strategic alliance between Riyad and Moscow on oil pricing/production can continue well into 2022, especially since Saudi Arabia has initiated diplomatic/intelligence conversations with an Iran now also engaged in JCPOA resurrection talks with Biden's diplomats in Vienna. Yet, as always, the best laid plans of mice and men aft go astray as Robbie Burns warned us. If the killer virus ignites a new pandemic, Brent crude could well plunge to $30. After all, I will never forget that its April 2020 low was $20 a barrel and crude oil futures were negative. Of course, the CDC may come out next week and declare that the South African mutant killer virus can be zapped by the existing Pfizer/Moderna vaccines. In this scenario, Brent could well surge to $85 as the hit to gasoline, jet fuel and distillates will be minimal. The South African COVID variant is not an unknown unknown but a known unknown, which is not remotely as frightening since we have vaccines to protect our species. So I expect that the Armageddon scenario in black gold will not happen and I am drilling for el cheapo oil and gas equities on Wall Street. Sheikh Yamani had it right in the 70's. The Stone Age did not end when humans ran out of stones and the oil age will not end because we run out of oil–. Matein Khalid is Strategic Advisor with Asas CapitalMENAFN26112021000152002308ID1103258372