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.

Support Links:

Oil Price

Check prices of the latest stocks

Bloomberg report

Comments

Post a Comment

Popular posts from this blog

The need for divesifiaction in imports

Image
Topic: International Trade  What is in it for you:  Of the 6,000 plant species humans have eaten over time, the world now mostly eats nine, of which just three —  rice, wheat, and maize —  provide 50% of all calories . The cheaper the food gets, and the lower the imports from the government, the dependence on the above-mentioned crops rises and given with it the dependence on a few select countries . In addition to that, people now have diets with more fats and carbohydrates, and fewer nutrients.  Effects:  The UN estimates soaring costs will push 71 million people globally below the poverty line .  Global crop yields could fall about 30% because of climate change, while food demand is expected to jump 50% in the coming decades, according to United Nations estimates. New opportunities and Future insights:  It will be a long road for any of these initiatives to make a notable difference against the trend for homogenization the industrialized s...
Read more

Saudi-US Tensions Simmer

A dispute over oil risks causing irreparable harm to US relations with Saudi Arabia, a crucial partner for Washington in the Middle East. Causes: Nearly two weeks on from a decision by OPEC+ to cut oil production, tensions are escalating. White House National Security Adviser Jake Sullivan fired the most recent salvo, saying the US would consider changes to the security and military support it provides Riyadh. “The president isn’t going to act precipitously,” Sullivan said on Sunday to CNN. Biden will “take his time to consult with members of both parties put over oil risks causing irreparable harm to US relations with Saudi Arabia, a crucial partner for Washington in the Middle East. Effects: In response, officials across the Middle East have denied the supply decrease was politically motivated or a reflection of support for Russia following its invasion of Ukraine. Saudi Defense Minister Khalid Bin Salman said the deci...
Read more

Goldman's Another Reorganization

Goldman Sachs Chief Executive Officer David Solomon is embarking on his third major recognisition  of the bank in four years, undoing changes made there as recently as 2020.  Effects: The Wall Street giant plans to—once again—combine its expanded asset management and private wealth businesses into one unit. Goldman will also unite its investment-banking and trading operations under one group. The money-losing consumer unit will be broken up. Together, these moves mark a reversal for Solomon, 60, who had forged ahead with plans to separate the asset management and wealth business despite skepticism inside the bank. He was also reluctant to combine investment banking and trading into one group, as the firm looked to talk up other fee-based businesses to win over shareholders. What is in it for you:  Most visibly, he’s disbanding the direct-to-consumer efforts, cutting short the retail banking dreams that he had spelled out in his early days as CEO. A smaller subset of that...
Read more