إستخدام اللغة العربية

 
 
 
 
 
What’s behind the latest oil price plunge?
Wednesday 31 October 2018

The mercurial nature of the oil market has flipped the mood in the past two weeks from hysterical expectations of severely reduced supply from Iran to concerns over the pace of global economic and oil demand growth. Trade wars, weakening emerging markets and currencies, and the strengthening US dollar began to overshadow market fears that OPEC leader Saudi Arabia, non-OPEC leader Russia, and their partners in the production cut deal may not be able to offset the loss of Iranian barrels and continuously falling production in Venezuela. Then the market had to digest the latest geopolitical flare-up with the killing of a Saudi journalist critical of the Kingdom, the international outcry over the incident, and an initial veiled Saudi threat that it could retaliate to any potential sanctions over the death of Jamal Khashoggi. Saudi Arabia admitted late last week that the journalist was killed in what it described as a “brawl” in the Saudi consulate in Istanbul. While the market was weighing this development, oil prices were trending down and plunged on Tuesday to a two-month low, with both WTI Crude and Brent Crude slumping by four percent—the worst one-day drop since July. The plunge was the result of several factors. First, Saudi Energy Minister Khalid al-Falih stepped up rhetoric this week about how reliable Saudi Arabia is as a supplier, how it is ready to meet all customer demand there is, and how the Kingdom won’t weaponize oil and has no intention of repeating the 1973 oil embargo due to the Khashoggi case. Next, the market has started paying more attention to the demand side of the equation, as concerns creep into the market about an imminent slowdown in global oil demand growth due to the high oil prices and strong dollar that weigh on emerging markets’ oil import bills, and looming global economic growth slowdown amid trade wars and tariffs.

 

 

 

 

 
 
 
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