Well one commodity that will have cost people dearly.
If one looks at the graph – this is the best it is going to get – argue all you like – but the graph speaks volumes – the ‘froth’ in the oil is the best it will get.
The Middle East conflict has done little to increase the oil price – the conflict in Syria has been accounted for in the figures.
Therefore – expect the finalization of the Syrian conflict to reduce the price further. If one anticipates USD35.00 a barrel then one would be in the ballpark.
The next question is when will this Syrian conflict end?
That is a big question and if one looks at the mess and Qatar’s sabre rattling – then the whole drama may carry on for some time. One must remember that Qatar and Saudi Arabia have invested over $300 billion in military equipment.
Yes wars cost money – and what a brilliant idea to get involved in a war to deflect public opinion on the economic deficiencies at home – with the anticipation that oil and gas prices will increase.
That being said the IMF have warned the Saudi’s – that if they keep on spending the way that they are now – in five years they will be bankrupt – ummm does LaGarde and the IMF know something on the duration of this Syrian situation and the war in Yemen that we do not?
IMF should be worried about all the oil exporters.
The dominant oil exporters – the OPEC, Nigeria, Iran, Saudi Arabia, Venezuela, Denmark and Russia are all in a terrible mess.
All liquidating sovereign funds or discounting sales with over production to cover increased internal costs.
Saudi Arabia has been put on notice
My biggest concern though is Russia – the international bonds that will fall due – or are falling due cannot be refinanced – the ‘illegal’ sanctions that apply to this country – limits the avenues for borrowings – the existing bonds cannot be just ‘rolled over’.
They have to be repaid and that involves refinance in a hostile environment.
Nothing however – will cover the lack of demand in oil – even as one looks at the current price and the Middle East conflict – it is obvious that the current oil price – has the current turmoil factored into the price.
I have reviewed the Oil ETF’s on regular occasions and the oil producers reports – the Bulls definitely feel that there is ‘froth’ in the market and there is intense buying on rumor – this is then dashed with immediate selling. The graph above actually is starting to look like the froth on a stein of beer.
Russian oil sales to China exceed those from Saudi Arabia.
Discounts are now being offered by the House of Saud in an attempt to sell their over-production.
Winter is coming in Europe – Russia has this gas supply tied up.