MEXICO CITY, MEXICO / ACCESSWIRE / June 2, 2020 / The oil industry is in the grips of what is regarded as its greatest distress ever, going through a crisis that has shaken even a market accustomed to the rapid succession of peaks and troughs. Having observed closely the turmoil in the past three months, seasoned forex broker Pablo Soria de Lachica notes, “No commodity is as important for the global economy as oil, and rock-bottom prices for the black gold are not necessarily a good thing in the longer run. The current pandemic has brought social life and business activities to a near-standstill, decimating demand for oil and triggering an unprecedented event – negative prices of West Texas Intermediate (WTI) futures contracts for May. Although the shocking development was short-lived, there are perfectly valid concerns about the future of the oil industry and the ripple effect of the current crisis. The global economy is already in a recession, and with oil demand unlikely to rebound strongly any time soon, a possible outcome could be another financial crisis.”
There are already projections that the downturn could persist until the end of 2021 and even beyond given that economic activity cannot return to its previous levels until the current public health emergency is handled, Pablo Soria de Lachica says. According to a New York Times article, “The abrupt halt of commercial activity threatens to impose economic pain so profound and enduring in every region of the world at once that recovery could take years. The losses to companies, many already saturated with debt, risk triggering a financial crisis of cataclysmic proportions.” These sentiments were echoed by Harvard economist Kenneth S. Rogoff, who told the publication, “I feel like the 2008 financial crisis was just a dry run for this. This is already shaping up as the deepest dive on record for the global economy for over 100 years. Everything depends on how long it lasts, but if this goes on for a long time, it’s certainly going to be the mother of all financial crises.” At the center of this gloomy picture is the far-reaching impact of the oil collapse, which has derailed the stock and credit markets, threatening a tidal wave of corporate bankruptcies and fueling unemployment rates, Pablo Soria de Lachica explains.
Even though companies and governments learned some hard lessons from the 2008/2009 crisis, today’s financial system is so interconnected that a severe upheaval in an industry as vital as oil is bound to have profound consequences. “If the collapse in the May contract on 20 April was a transitory illustration of the problems in oil markets, the fact that 2022 futures prices for that day were not much above $30 emphatically does not bode well. Oil needs to be expensive enough to cover the costs of production, and in the case of American shale oil to service the debt sustaining the sector. Without higher prices, there will be insufficient supply to restore growth, and oil will cause cascading defaults across credit markets that will risk another banking crisis,” Helen Thompson, professor of political economy at Cambridge University, writes in an article for The Guardian.
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 Explains the Recent Unprecedented Drop of Oil Prices into Negative Territory: https://www.itbusinessnet.com/2020/05/pablo-soria-de-lachica-explains-the-recent-unprecedented-drop-of-oil-prices-into-negative-territory/
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
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