Stock markets across the world are continuing to plunge after an already bad week that ended on Friday for most of the major markets around the world. The United States market, Egyptian market, and Gulf markets as a whole all saw significant losses in recent trading. Even as Abdalla el-Badri called for oil investment to remain at its current levels, or to increase – the head of the Organization of Petroleum Exporting Countries couldn’t even spur the move in the opposite direction.
The price of a barrel of oil hit $57.49 at close on Friday from $98.17 just at the end of 2013. The 41% decline was a surprise. While slight fluctuations in the overall price per barrel of oil is normal, massive declines – like this – are anything but expected. Asking el-Badri if OPEC would make any changes to their forecasts or expectations Suhail Al-Mazrouei, of the United Arab Emirates pointed out that “We are not going to change our minds because the prices went to $60 or to $40.”
The Dubai stock index fell a massive 7.6% on Sunday. To put that in perspective, that would be the equivalent of the Dow Jones industrial average falling 1,313 points in one day of trading. Meanwhile, in Egypt stocks plunged 22 billion Egyptian pounds – or what is the equivalent of just over $3 billion. In a rather destructive day of trading 170 stocks fell, while just 5 stocks actually saw improvements from open of trading. What is surprising about the fall is that typically Egypt does well when the price of oil falls due to the fact that Egypt is a net importer of oil products.
As the outlook continues to look grim for the United States as they head into a new week – and with little information that would yield positive results – Asian markets also fell after a lackluster week in the United States, and with such a grim outlook. Stocks in Tokyo hit 1 ½ month lows, and continued to slide almost 1% in the very early hours of trading.
However, no matter where the analysts are across the globe the reasoning remains the same. “The oil price collapse is symptomatic of a lack of global demand,” according to Stewart Richardson. Ultimately, the market is at the mercy of the demand.