By: Rida Fatima
What happens to the commodities which you no longer use? Their prices dive and their stocks become worthless. Imagine entering a market to buy a bar of chocolate which is priced at -10 rupees. It means that as a buyer, you not only get the chocolate but the seller pays you 10 rupees. This is what happened to the oil prices which dwindled to negative digits after weeks of tumbling prices. Though, it only occurred in one corner of the global oil market yet its consequences are widespread.
This sharp decline of the oil prices can bring forth a wave of political instability and social unrest in countries whose major chunk of revenue is based on oil exports
The coronavirus pandemic is opening a war at every front. Be it social, political or economic. People are losing their jobs, the markets have plummeted and the economies are on the brink of a recession. The oil prices are at their historic low. People are confined at homes, ships are docked and trade is slow. The demand has drastically dipped but the production remains the same. Despite the successive OPEC+ meetings on production cuts, the sight is still gloomy as the fear of competition in the oil market is keeping the production high on part of the oil-producing states.
This sharp decline of the oil prices can bring forth a wave of political instability and social unrest in countries whose major chunk of revenue is based on oil exports including Saudi Arabia, United Arab Emirates and Kuwait. The slashed oil prices will slash the government’s spending and it will lead to a lower standard of living and such situations can trigger protests and mass strikes. Which, during the time of pandemic can be highly detrimental. More so, such a loophole on the part of the states can leave a vacuum which will be filled by other actors ready to take advantage of this gruesome situation for political point scoring. With the rise of the coronavirus, the inward looking approach by the developed states is creating oblivion towards the international crisis which predates the pandemic. The surge of cases in the war ravaged and fragile states like Syria, Yemen, Libya threatens the whole Middle Eastern region as they indicate a rise in popular grievances because the governments are unable to deliver and the vacuum is left open to the exploiters.
All this is resetting the contours of the capitalist world. Previously, such imbalance of supply and demand were corrected through the inducement of aggressive incentive programs to attract the consumers. It was apparent in the case of the auto industry post the 2008 financial crisis. However, the pandemic is transforming the world and creating a new normal. The inducement of demand today can cause a new humanitarian crisis and worsen the already existing ones. Many states of the developed world are planning on opening up their industries though multiple phases but it can be pernicious as the number of cases have neither been reduced nor have been stagnant. However, keeping the world activities halted can generate other challenges.
We as human species are facing a new challenge calling for new measures. Our strategies need to be reflective of this. An eye on the other global challenges is also important as they can play a major role to either overcome the pandemic or to worsen it.
The writer is a freelance contributor and a student of Politics and International Relations, Quaid-I-Azam University, Islamabad. She can be reached at [email protected]