It may be hard to visualize a world without the need for crude oil, but it is possible.
OPEC’s de facto leader, Saudi Arabia, is banking on this possibility to explore the revenue potential of the non-oil industry.
The pandemic paralyzed the Kingdom’s crude operations more than any country in the globe as it is the world’s biggest exporter of black gold.
This made policymakers realize the greater importance of having alternative sources of income.
During the release of its Purchasing Managers’ Index, the non-oil private sector notched its seventh month of consecutive expansion.
Since the start of the year, the indicator sit above the 50-point level which shows a healthy performance of the indicator.
The demand and price of fossil fuel for energy consumption has gradually recovered over the past months.
Thanks to the initiative adopted by the Association of the Petroleum Exporting Countries which played an important part in the process of recovery.
The bloc resorted to the adoption of production curbs to support the flagging prices and overall operations.
On the other hand, the global demand remains subdued and long-term prospects are vaguer than ever due to the rise of sustainable energy resources.
Last week, API inventory showed an unprecedented draw in stockpiles which is consistent with EIA’s findings.
This shows that while the price has recovered, the improvement is mainly supply-driven and not from a stimulated demand.
This ongoing uncertainty puts Saudi Arabia on the spot, increasing its need to diversify income sources.
The country is allocating more than $7 trillion in the budget to fund non-oil industries that could sustain its impressive economic growth over the years.
Oil Price Update
Amid the persisting pandemic, with no catalyst to support its hike, oil price edged lower in Asia.
The Brent crude futures edged lower by 0.06% to near $63.00 per barrel, still resting above $60.00 per barrel.
Meanwhile, the West Texas Intermediate futures contract hovers just above $59.00 per barrel after a 0.10% fall for the day.
Both benchmarks were initially expected to fall below these steady levels but luckily stayed safe, at least for now.
On the other hand, the Federal Reserve Chairman Jerome Powell’s recent speech failed to buoy both from current levels.
This is despite the policymaker’s greater optimism on strong growth and employment recovery.
The vaccination process in the world is also starting to loosen its appeal amid the still growing daily infections.