Staff Reporter
Karachi
Convener FPCCI Central Standing Committee on Insurance Dr. Murtaza Mughal on Sunday said coronavirus has shattered oil market which is an opportunity for the government to shore up strategic oil reserves.
The government should provide relief to masses by a reduction in prices of oil and electricity and build strategic oil reserves as oil in the international market has become cheaper than the bottled water, he said.
The burden of the surge in the oil price in the international market is immediately transferred to the masses by the government but the process of reduction in the prices is always very slow in case of reduced oil prices, he noted.
In a statement issued here today, he said that the coronavirus has dropped the demand for oil while the ongoing price war between Russia and Saudi Arabia has further reduced prices which should be considered an opportunity by our government.
Building oil reserves will improve energy security, therefore, it should not be delayed as the tussle between major oil producers may not last for a long time, he said.
Dr. Mughal noted that the price war is bankrupting majority of the oil producers and they are eager to find a solution to the stalemate while Saudi Arabia is using the opportunity to keep its dominance in the global oil market.
He said that the Saudi decision can also dismember OPEC as a majority of the members of the group want to increase the price which is not possible at present due to aggressive approach of the kingdom.
He informed that Saudi Arabia is spending $8.98 to produce one barrel of oil which is cheapest in the world while the cost of US shale oil production stands at $23.35, non-shale oil cost stands at $20.99 while Russian production cost stands at $19.21 per barrel.
He said that one trillion-dollar coronavirus response package by the US and many billions committed by other developed nations improved the oil prices for a day after which it fell again and it may go down further, he said.
