THE DAY BEFORE ‘THE DAY AFTER’

As most analysts quickly realized, the abrupt fall of stock markets worldwide this Monday was not caused solely by the uncertainty of the investors as to the size and duration of the impacts of the Covid-19 epidemic on the economy. Saudi Arabia’s poorly-timed decision of breaking the OPEC+ entente and starting an oil price war with Russia (and with other non-OPEC producers) was an additional, and arguably equally important, cause of market turmoil. The reason why the sudden fall in crude oil prices hit capital markets so hard has more to do with the unpredictable character of the underlying dispute than with the so-called ‘economic fundamentals’, which would normally point in the opposite direction. And although it is true that, technically, there is room for agreement between oil-producing countries on the issue of a concerted reduction in supply, it is also patent that the main players are entrenched in their…

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