| 26 May 2024, Sunday |

Who will contribute to reducing global oil prices: Biden or Omicron variant?

After the fourth meeting of the Index Committee, Labor Minister Mustafa Bayram announced that the decree raising the transportation allowance to 65,000 LBP per day for private sector employees will not wait for the government to convene. The State Council has approved this decree, and it will be referred to the General Secretariat of the Council of Ministers, and then submitted to President Michel Aoun upon his return from Qatar to sign it with Prime Minister Najib Mikati.

As for the monthly social assistance, no agreement was reached so far between the economic bodies and the General Labor Union, as information reported by Sawt Beirut International indicated that the Minister of Labor insisted that any increase in wages should be calculated within the salary basis and thus raise the National Social Security Fund contributions.

This proposal was opposed by the employers, who also refused to pay 1.235 million LBP as a monthly increase, and proposed giving a attendance allowance of 65,000 LBP per day in addition to the transportation allowance. On the other hand, the General Labor Union rejected any reduction and insisted on calculating social assistance within the salary basis.

Since the propositions have reached a sensitive level, Bayram decided to submit them to PM Mikati to see the general direction of the state and build on the matter accordingly.

Several factors will determine the course of global oil prices in the coming period, including the decision to release the United States’ strategic oil reserves, the upcoming OPEC meeting this week, and fears of the outbreak of the new mutated Corona. On the local level, fuel prices are now at the mercy of the exchange rate, not the global oil price.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies within the framework of “OPEC +” will hold a meeting on Thursday to discuss the potential impact of the spread of the new mutated Corona virus “Omicron”, on the demand for oil in the world, as concerns could lead to new lockdown measures and restrictions on movement, and thus the decline in economic growth, which will further weaken the demand for crude oil.

Oil prices have witnessed a slight drop since US President Joe Biden announced the release of 50 million barrels of the United States’ strategic oil reserves, to mitigate the rise in oil prices in global markets, and to put pressure on oil producers that are members of the “OPEC Plus” to increase their production, however, the new Omicron mutant, pushed it last Friday to record its largest loss in a year and a half, by more than 10 percent in one session.

Experts rule out that the US move will lead to a drop in oil prices, because the amounts that will be withdrawn from the reserves are not equivalent to oil consumption in the United States for 3 days. However, the real concerns lie in the measures that countries will take towards the Omicron outbreak, which will lead to impeding the economic recovery and declining demand for oil.

Locally, the drop in global oil prices was supposed to reflect a decline in fuel prices, but the instability of the dollar exchange rate and its continued rise against the lira, overthrew the positive impact of the global price decline.

The fuel prices schedule noted a decrease of $17 in the price of each 1,000 liters of imported fuel, but the citizen did not notice this decrease, but rather an increase in the price of a can of gasoline by 3,600 pounds, due to the rise in the dollar exchange rate, which removed the impact of this decline.

  • Sawt Beirut International