Oil: Expert voiced two reasons for the sharp collapse
The decline in oil prices was provoked by two reasons. First, it concerns the development of a negative scenario of trade wars between the US and China, and secondly, weak economic data in South Korea.
President trump said that he regrets not raise tariffs on China even more. Also, according to him, Japan will take more agricultural products, particularly corn, which should lead to the loss of the Chinese soybean business. Obviously, this will require restructuring the global supply chain, and it is already happening. It will also cause some concern among American consumers because it will lose let low-quality but cheap Chinese products.
In the long run it will be beneficial not only for the US economy, but also for other countries. Us sanctions have succeeded in reducing Iranian oil exports to almost zero. You might think that the Islamic Republic is on the verge of collapse, but it is not. Iran has been able to create alliances in the middle East that can be considered as a real revolution in the geopolitical struggle against Saudi Arabia and the United States. This fact also puts pressure on the oil market because of the shortage of oil is not observed.
On the other hand, OPEC countries will have to further cut production, at least 1 million barrels per day to the existing 1.2 million barrels, and this can lead to a sharp imbalance in the Eastern hemisphere. Russia, though not required, can also be connected to an agreement to reduce oil production.
Big players are trying to be outside the commodity market, allowing you to be at the helm speculative part, which is based on geopolitical news and responds to the data on oil reserves from the energy agencies of the United States.
While uncertainty about trade wars is retained in the short term, the global oil market is under serious pressure. Brent prices will continue to decline to$, representing 57.30 per barrel and shale oil WTI falls to $53,50 a barrel.
“International financial center”