Rand Hit By Corona Virus & Saudi Oil Price War
Global Markets Rocked
The main oil-producing countries are part of OPEC and work together to control production levels and pricing of oil. It is the kind of thing the Competition Commission in SA would shut down in a heart beat but they control the flow of oil and its value worldwide. These countries normally cooperate but the recent drop off in usage in oil by China amidst the Corona virus epidemic has seen oil (petrol) usage drop dramatically.
Now Russia and Saudi Arabia are at odds over how much to produce and what to charge for it. This has sparked a price war, with Saudi Arabia slashing the price of oil down to $35 a barrel (which is very low). As a result, the markets have been sent into shock (as big as back in 1991 when the first Gulf War kicked off).
‘Investors… panicked and stock markets worldwide felt the result’
Investors, who are already reeling from announcements regarding Corona Virus Covid19 (like how Italy is now shutting down countrywide in an effort to prevent the spread), panicked and stock markets worldwide felt the result with drops in values around 7 – 10%. Less “safe” currencies like the Rand took a pounding with the Rand to Dollar shooting up suddenly and then settling down at around R16 to a Dollar.