The situation on the oil market remains tense after the summit of OPEC and its allies yesterday. It was expected that this emergency meeting would produce an agreement between OPEC+ members to reduce their oil output by 10 to 15 million barrels per day.
They agreed on the lower side of that range - 10 million barrels, but Mexico notably refused to comply. Now Saudi Arabia and Russia await Mexico’s response. Reportedly, the United States supports the agreement as well, and would try to exert pressure on Mexico to back it. But if Mexico refuses, the agreement might not be ratified at all.
Moreover, as the negative impact of the coronavirus pandemic continues to lower the demand for oil, experts speculate that even a more ambitious cut of 15 million barrels per day will not bring the market out of the current oversupply crisis. Oil prices right now are trading 50% lower than before the Covid-19 pandemic began.
Yesterday’s highly anticipated initial jobless claims report out of the United States was once more worse than expected. At 6.6 million new unemployment registrations, the report is way worse than the 5 million anticipated. It is a repeat of last week and shows the US will hit high unemployment rates in the second quarter of 2020.
In the United Kingdom, the British pound made a modest recovery after news that Prime Minister Boris Johnson’s condition has stabilized. The PM is still hospitalized due to coronavirus complications.
While the coronavirus pandemic has been keeping everyone busy, the fact that the United States and China have still not fully resolved their trade conflict remains. Though right now might be the worst time for additional uncertainty on the global financial markets, it seems that there is another rift between the US and China brewing, this time over the state-run China Telecom, whose license to operate in the United States is being revoked over security concerns. The Chinese government is displeased with this action and has stated that China Telecom meets all of the security requirements necessary to operate in the US.
