I
n my last article I covered different prospects/facets that signaled towards the extension of an oil deal. Of late there are developments that not only serve as a testimony to the possibility of an extension but also its probable segue into the year 2018 (until March).

I
t has been a topsy-turvy story for the most traded and (politically and economically) significant commodity in the world. Welcome to the world of Crude Oil. Back in 2014 when the war between Sheikhs and Shale begun, Saudi Arabia deliberately balked to play the role of, what has been called, Swing Producer of the world. By refusing to turn off the taps Saudis envisaged a future that will, acting out of the principle of survival of the fittest, drive out high-cost producers (most importantly US Shale).

I
t has not been a happy story hitherto for oil markets as the prices continue to be under pressure. The recent inventory build-up of 5million barrels has once again made the total number of stock piles touching a historic high i.e. 533 million.

T
he oil markets have just received a long awaited yet unexpected jolt. “No one is yawning now”, as an article in New York Times puts it. The prices plunged 8pc in two days as the report from EIA department showed an inventory build-up of 8.2 million barrels rendering the total inventory at 528 million barrels, the highest in history. Before we move on there are few things to consider making sense of what is happening in the oil markets of-late. How did we get here?

I
nternational political observers were shocked by Brexit and then Donald Trump‘s US Presidential victory. These two events are potent enough to unnerve the contemporary global order: first, in matters relating to security and, second as to trade. By the end of next March, Theresa May will likely invoke Article 50 of the Lisbon treaty and the complex process of Britain’s divorce from the European Union (EU) begins.

O
f-late the monotonous oscillation of oil prices is making it difficult for writers and analysts to get any sense out of this whimsical trend. After the Vienna Oil deal in November 2016 and after the 21st January meeting between oil producers the oil prices have been moving up and down in the $50-$60 band.

E
IA recently reported that this year (2017) will see a highly volatile oil price. From 30th November to hitherto oil prices have seen a considerable upward trend. The prices have fluctuated at times due to the build-up in inventory and increase in the rig count, and at times when the wave of uncertainty swept across the markets---as it did in case of Libya and Iraq. Kuwait, Saudi Arabia and others have reported to be cutting their production as per the agreement.

A
mong political observers, there is a widespread notion that U.S. President-elect Donald Trump will inherit an economy in the best of shape. Inflation is down to historic and desirable levels, the unemployment rate stands at 4.9% and U.S. economic growth is better than expected. Moreover, observers can’t help but hear Mr. Trump’s boastful rhetoric as soon as he steps onto the bully pulpit. But as promising as the picture might seem, it will be very difficult to carry off his promise of ‘getting back our jobs’ in the long term.

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new year—new issues, new aims and ambitions. In the first snippet of Market Insights let us see what are the most pressing issues in the political economy in this year. Let us start with the European shock—Brexit. Theresa May has said to invoke the article 50 in March. Pound Sterling is expected go down in the coming months as the uncertainty looms over the economic performance of the UK under the new trade relations the medium and method of which will be formed in the coming months.

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