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The collapse of oil and fear of the coronavirus presage another disastrous Monday for the Bags

2020-03-09T11:46:30.187Z


Following in the wake of the Asian squares, the markets in Europe opened with losses of more than 13 points.


Idafe Martín

03/09/2020 - 8:03

  • Clarín.com
  • World

The European stock exchanges opened on the morning of this Monday, following the trend of Asians with a sharp decline , the largest in two hours for the markets of the old continent since June 24, 2016, the day after the Brexit referendum. Fear of the economic impact of the coronavirus epidemic and the collapse of the price of a barrel of crude oil due to the oil war between Saudi Arabia and Russia mark the first 100 days of the European Commission of Úrsula Von der Leyen.

An hour after the opening of the markets, the Pan-European Stoxx600 index lost 7% , and similar falls were seen in the main European Stock Exchanges. The London FTSE 100 index, in which raw material companies have a lot of weight, lost more than 8%. Oil giants like British Petroleum or Royal Dutch Shell were left almost 20% of their stock price. The Milan Stock Exchange fell 10% and the Italian country risk rose 30 points. In Athens the stock market collapsed 13.5% at the opening.

Reasons

The fall is understood by the fear of the coronavirus but also by the beginning of an oil war between Saudi Arabia on one side and Russia and the United States on the other. The fight started last Friday after a meeting of the Organization of Petroleum Exporting Countries (OPEC) in Vienna. In it, Russian Energy Minister Alexander Novak rejected Saudi plans and broke an alliance of years.

Figures at the close of the main markets in Asia, on March 9, 2020 - AFP / AFP

Ryad responded by announcing that the price of all its types of oil was going down for all its buyers, a decision that, together with a situation of weakening demand due to the effects of the virus, especially in China (14% of the planet's oil consumption) sank the prices until falling on Monday of 30% of the price of the barrel.

The Brent of the North Sea, the barrel that marks the reference in Europe, fell on Monday 26.3% to 33.3 dollars. The look is now on the opening of Wall Street and the answer that can be given by 'Texas', the barrel that marks the American reference.

Brent barrel price falls from January 15 - AFP / AFP

The barrel of oil is worth half of that at the beginning of January, for fear of the impact of the virus but also for that oil war. Saudi Arabia wants to maintain the supremacy of an OPEC that is losing weight and no longer represents 35% of world oil production due to the increase in shale oil in the United States and the continuous increase in production in Russia.

Saudi Arabia decided in 2016 to end American producers. It would flood the oil market to knock down prices and end that competition. But the Americans resisted and the United States is already a net exporter. The sinking of the price of oil now damages mainly the countries that depend on their export to balance their accounts, such as Argentina, Brazil, Colombia, Mexico or Venezuela in Latin America. Or Russia itself.

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Europe expects the European Central Bank (ECB) to move, although the European issuing body barely has bullets in the bedroom after almost a decade of extraordinary measures and interest rates at -0.5%. Investors run towards insurance. The 10-year German bond, the benchmark in Europe, marked Monday -0.8%. That is, the markets pay Berlin 0.8% for lending money.

European governments began taking action days after the European Commission said it would not take into account spending related to the coronavirus crisis in its analyzes of sustainability of public accounts. Berlin announced on Monday a package of 12.4 billion euros (almost 15 billion dollars). With that money investments will be made, the most affected companies will be helped and part of the day's reductions of their employees will be paid.

Faith Birol, executive director of the International Energy Agency, said this morning that "the combination of a massive offer and a significant shock of demand at the same time" means that "the situation we were experiencing today has no equal in the history of oil market ”.

Brussels, special

Source: clarin

All news articles on 2020-03-09

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