BIG Oil Selloff

Today we saw a major selloff in Crude oil (link below for charts).  In a matter of a few hours, the oil prices dipped from $120/barrel to $115/barrel in a matter of 5 hours. This has been the biggest single-day dip since the inflation grew due to the covid and the Russia-Ukraine war.

Causes: The likely causes of this effect are that the EU couldn't agree on stopping Russian oil from being transported to the European countries via the sea, hence leading to the delay in sanctions. Another more likely cause could be that OPEC has started pumping more oil. And Russia is likely out of the OPEC. This speculation is based on the Bloomberg post that OPEC is considering Russia's removal from OPEC as it hasn't met the demands of the monthly quota. This means that the other OPEC countries such as Saudi Arabia get a bigger chance to pump more oil, leading to a decrease in the price which topped $120/barrel.

Effects: The removal of Russia could mean that the buyers of Russian oil no longer have to follow the norms of the OPEC guidelines. 

What this means for you: Expect a rise in the stock prices of logistic and energy-producing companies. Short the companies which produce oil or trade oil.

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