Press review: Oil prices collapse and Russians stockpiling food amid coronavirus fears / News / News agency Inforos
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Press review: Oil prices collapse and Russians stockpiling food amid coronavirus fears

Press review: Oil prices collapse and Russians stockpiling food amid coronavirus fears

Top stories in the Russian press on Tuesday, March 10, prepared by TASS

Vedomosti: Russia, Saudi Arabia trigger oil price collapse

OPEC members and Russia failed to agree to extend their oil output cut deal, triggering a slump in oil prices. An ideal storm has struck the oil market as prices have been declining since the beginning of the year due to the coronavirus outbreak, which has got economists talking about a looming recession, Vedomosti writes.

"Trade wars are likely to resume on the oil market in April," Chief Analyst at BCS Premier Anton Pokatovich said. Saudi Arabia plans to increase its oil output instead of reducing it and is already offering significant discounts to customers in Europe, Asia and the US. The situation is very tense, Skolkovo Energy Center expert Yekaterina Grushevenko pointed out. According to her, global oil supply may grow by 2-3.9 bln barrels a day depending on Saudi Arabia’s strategy. The country is capable of increasing oil production further, while Russia’s production capacities are limited, Fitch analyst Dmitry Marinchenko noted.

Both countries seek to force US shale oil producers to retreat from the market, experts emphasize. "It’s hard to say whether Saudi Arabia is more willing to make Russia return to the OPEC+ group or kill shale oil production," Marinchenko said. Russia is also facing the task of putting pressure on the US oil industry, ING analysts noted. However, shale oil producers have a safety margin. According to the International Energy Agency, shale oil companies may have to start reducing output when oil prices fall below $25 per barrel. Besides, "they are major US employers, so the government will hardly allow mass bankruptcies to happen," ACRA analyst Vasily Tanurkov stressed.

There will be no winners in the price war, KPMG Global Head of Oil and Gas Anton Usov said. "The parties need to resume talks and try to stabilize the market, though it will be difficult in the short term," he noted.

Nezavisimaya Gazeta: Saudi Arabia may see new king amid oil price war

Saudi Crown Prince Mohammad bin Salman is thought to be planning to take the throne from his father, King Salman, ahead of time, Qatar’s media wrote, citing sources. Saudi Arabia has seen another crackdown on royals following the collapse of the OPEC+ deal. Some senior members of the royal family have been detained, who were believed to be able to compete with the crown prince, Nezavisimaya Gazeta notes.

Those detained include King Salman’s brother Prince Ahmed and the king’s nephew Prince Mohammed bin Nayef. According to sources cited by the Middle East Eye news outlet, King Salman had tried to persuade his brother to support the transit of power but Prince Ahmed refused, saying that though he himself had no wish to fight for the throne, there were better candidates than the incumbent crown prince.

Experts believe that the reported detentions in Saudi Arabia did not follow the OPEC+ deal’s collapse for no reason. "Given the current economic situation in Saudi Arabia, the termination of the deal may pave the way for a crisis, encouraging some members of the royal family to oppose the crown princes’ policy," Professor at Moscow State University’s School of World Politics Grigory Kosach pointed out.

"There is a long tradition in Saudi Arabia that the ruling monarch remains on the throne regardless of his health, until he passes away," Kosach noted. "Although the crown prince represents a new generation in the royal family, which has little respect for the Saudi establishment’s traditions, I believe that he will wait for his father to pass away before entering office. At least, he has not yet been involved in attempts to downplay his father’s role, in word or deed. On the contrary, he often points to the king’s authority in his speeches," the expert emphasized. However, Kosach admits that a struggle for influence continues in Riyadh.

Izvestia: COVID-19 impacts global economy more than other 21st century epidemics

The novel coronavirus has already surpassed other 21st-century epidemics as far as its impact on the global economy is concerned. Experts at Plekhanov Russian University of Economics compared the impact of global epidemics like COVID-19, the Ebola virus, swine and bird flu, and SARS, and came to the conclusion that past outbreaks did not affect the economy and stock indexes that much. Experts say that it’s not the consequences of the disease but the measures to prevent its spread that are the reason why COVID-19 has dealt such a blow to the global economy, Izvestia noted.

"Unlike previous epidemics, the coronavirus is starting to affect the economy because of its rapid spread outside Asia. Its influence is growing even more because of large-scale media coverage," Plekhanov Russian University of Economics Professor Denis Domashchenko said. "The global economic slowdown is not due to a stock market panic, but stock exchanges are beginning to panic, waiting for a decline in the global GDP growth rate, which will follow measures aimed at slowing the spread of the coronavirus," Head of Equities at Otkritie Asset Management Vitaly Isakov said.

When a SARS epidemic broke out back in 2003, China’s share of the global GDP stood at only four percent, but now it has grown to reach 16% and the issues that the Chinese economy is facing have far more impact on global markets, said Barry Erhlich, an investment strategist at VTB My Investments. According to him, most global companies either sell much of their products in China or have Chinese suppliers. Investors are concerned that the coronavirus outbreak may mark the start of a recession due to a decline in economic activities and consumer confidence, the expert explained.

Chief Economist at the PF Kapital consulting company Yevgeny Nadorshin believes that if the global epidemic has already passed its peak, then global economic growth rates will slow down to an annual average of 1.5%. However, if the epidemic lasts for at least another four months, the world may have to face a recession.

Nezavisimaya Gazeta: Afghanistan faces dual power crisis

Two parallel presidential inauguration ceremonies have taken place in the Afghan capital of Kabul. Incumbent President Ashraf Ghani was proclaimed the country’s new head of state at one of the ceremonies, while the other honored his main rival Abdullah Abdullah, who had refused to recognize the outcome of the September election. The feud puts into question talks between Kabul and the Taliban movement (outlawed in Russia), as well as the deal between Washington and the insurgents, which paves the way for the withdrawal of foreign troops, Nezavisimaya Gazeta writes.

According to the TOLOnews TV channel, Ghani and Abdullah held a meeting and tried to come to an agreement. Ghani offered 40% of cabinet seats to Abdullah, as well as the position of the chairman of the High Peace Council that will hold talks with the Taliban. However, according to people from Abdullah’s close circle, he demanded that the election’s outcome be cancelled.

Arkady Dubnov, an expert on Central Asia and Afghanistan, points out that Ghani’s inauguration will provide him with the opportunity to form Kabul’s delegation for talks with the Taliban. "However, on the other hand, two inauguration ceremonies pave the way for a dual administration system. In such a situation, Kabul will have limited opportunities to make decisions. It is also possible that the Taliban will seek to put stronger pressure on the government. The matter is that they don’t recognize Ghani because they consider him to be a puppet. They will continue attacks to make sure their prisoners are released. Ghani opposes such a step. And people in the country’s north, controlled by Abdullah, may initiate the release of Taliban prisoners they hold. This is what a dual administration system will lead to," the expert said.

The US-Taliban agreement stipulates that Trump will leave Afghanistan. The parties also agreed that the Taliban will not attack Americans. It is reminiscent of the troop withdrawal agreement that Soviet commanders made with the Mujahideen in 1988-1989, Dubnov pointed out. He did not rule out that the deal’s classified annexes outlined a safeguard mechanism that would be used if the Taliban violated their obligation to prevent Al-Qaeda (outlawed in Russia) and other terrorist organizations from using Afghan soil to carry out attacks on other countries.

Vedomosti: Russians stockpiling food amid coronavirus fears

The demand for long shelf-life products, household chemicals and personal hygiene items skyrocketed in Russia in February, Vedomosti wrote, citing spokespersons for a number of retail networks and manufacturers. People are getting emergency supplies for the possible expansion of the coronavirus outbreak.

Infoline Analytics Director General Mikhail Burmistrov believes that coronavirus fears are the main reason for the growing demand. Many Russians still remember the late Soviet period, when stores often had little to offer, while others fear that the country will be hit by a crisis like the ones it has seen in the past several years, when the price of certain goods - for instance, buckwheat - could suddenly rise. Canned goods, cereals and pasta are cheap and often sold with discounts, so many people can afford stockpiling them, Burmistrov explained.

It is easy to understand the reasons behind a feverish demand for food, household chemicals and personal hygiene items in online stores, the expert went on to say. People are afraid to go outside for fear of contracting the virus. Visiting an offline store bears the risk of getting infected. At the same time, online trading platforms provide customers with an opportunity to avoid potentially dangerous public places.

Given the lack of information about the coronavirus and the unprecedented preemptive measures that the government has been taking, people fear the unknown and are instinctively trying to make themselves safe and create an impression that they have the situation under control. This is why they are hoarding surgical masks, medicines and long shelf-life products, psychologist at the Agressia.Pro center Vladislav Volkov pointed out.

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