Question

‘Increase or decrease in the oil prices will affect the price of a commodityin the UAEmarket’. Comment.

Answer 1

Answer:

Hi buddy

Explanation:

Now that the United States has increased oil production through shale oil and ... In this article, we will look at how oil prices impact the U.S. economy. ... Conversely, high oil prices add to the costs of doing business.

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Answer 2

Answer:

When oil prices were strong, the United Arab Emirates' government spent heavily in diversifying its economy. A large portion of its economy is now related to non-oil revenues and much more resistant to fluctuation of oil prices. Oil revenues are actually only over 30 per cent of the country's GDP compared to 90% in the 1970s. However, in recent years there have been significant international investments, particularly in the UAE and Saudi Arabia, helping both countries support govt. spending

However, since oil revenues already account for approximately one third of national GDP, the economic development of the United Arab Emirates could be slow when there is decrease in oil prices. The GDP of the nation may also be slower. But then govt of UAE has always had  some saving measures during this time. In order to save costs, government subsidies for petroleum products are revoked and their prices connected to market.

Finally, in terms of its potential to maintain declining oil prices in the region for many years, crude oil production has already been characterized in the UAE by lower production costs than global competitors ..

While the above applies to a situation when there is fluctuating oil prices in the global economy due to economic and controllable factors, in case of the present pandemic crisis (uncontrollable factor) where oil prices have steeply fallen, the situation is different for UAE

The sharp decline in the oil price and the outlook for a price war are considerable downside risks to the the UAE economy  

Owing to the novel coronavirus, low crude prices are seriously threatening UAE because of which UAE is expected to have lower economic growth rate in the year 2020

Mainly because of lockdown and shutdown of businesses temporarily there is a glut in supply and low demand from key oil buyers which will impact and hurt the economy very badly

Explanation:

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