News from the Gulf

 Since oil prices have crashed since their peak, the Organisation of Petroleum Exporting Countries (OPEC) has been actively reducing oil production to increase its net profit margin.

Causes: Crude prices surged above $120 a barrel after Russia’s invasion of Ukraine in February, boosting economies and stock markets across the Persian Gulf. Since then, a strengthening dollar and traders’ concerns about slowing global growth have led to a drop to around $90. Now that the US & Europe is forcing Saud to increase the production, the relations have become even more delicate

 Effects: This dropping in prices resulted in companies refining and exporting the oil experiencing losses, in addition to the ever-increasing inflation and strengthening of the dollar. The OPEC has reduced oil production by 100,000 barrels a day (equivalent to 0.1% of global oil consumption) adding a factor to the recent Market rally even when the FED is increasing the rates. The prince of Saudi Arabia has warned the investors against shorting OIL as the OPEC plans on reducing OIL production even further.

What's in it for you: Many Wall Street investors and OIL experts argue and agree that once the COVID lockdown in China will reduce, the demand surge will cause the prices to grow again, but till then many of the investors decide to remain bearish. The transporters of oil are likely to experience a decline in profits along with car manufacturers and electricity generators.

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Saudi Warning

Future Predictions

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