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Key operational details missing in Europe’s plan to release diesel reserves
Naeem Aslam, a chief investment officer at Zaye Capital Markets in London, has told Al Jazeera that the details of Europe’s deal to release diesel stocks are “very sketchy” from an operational perspective.
“The announcement seems to be intended to ease off the pressure, but the actual structural changes; who is going to release them, and where the bans would be lifted, remains unclear,” said Aslam.
He added that the decision is only an attempt to “slow down the bleed,” and will have an adverse influence on the market.
“Imagine a situation when there is a run on the market, and all of a sudden central banks come, and they say you can only withdraw a certain amount of money from the bank, that actually slows down the bleeding process, but it also creates more volatility in that particular aspect of investor confidence in those institutions,” said Aslam.
“Now, exactly the same rule applies over here. This is a massive announcement to slow down the bleed, but the actual structural issues in relation to the Strait of Hormuz are still there, making consumer confidence in the market shaky."
Source: AL Jazeera.