I agree with you on both points - about Saudi pressure on Putin and Iran, and on the Ebola effect on world transportation...you must have read the same article I read.. I think crude's headed south for now..the shorts will cover and then it will get killed. World stock markets are headed south in general finally, it seems. I've been 100 percent cash since I got my inheritance, except for some high yield Canadian telephone utilities, which should be ok with a 4% yield in a weak macro environment - I don't see rates going up anytime soon with all this weakness. More likely 1% Fed funds rate for the next 10 years, or even negative bond yields like short rates in Germany. This environment is very deflationary - the economy of the US sucks - the unemployment statistics are a joke when you look at labour force participation etc. - that can't be good for energy demand. It does suck to be in the Canadian dollar though with weak energy markets, which is also headed south. Maybe I should own some U.S. cash.
Here's the extract...
Saudi Arabia to pressure Russia, Iran with price of oil
Saudi Arabia will force the price of oil down, in an effort to put political pressure on Iran and Russia, according to the President of Saudi Arabia Oil Policies and Strategic Expectations Center
Saudi Arabia plans to sell oil cheap for political reasons, one analyst says.
To pressure Iran to limit its nuclear program, and to change Russia's position on Syria, Riyadh will sell oil below the average spot price at $50 to $60 per barrel in the Asian markets and North America, says Rashid Abanmy, President of the Riyadh-based Saudi Arabia Oil Policies and Strategic Expectations Center. The marked decrease in the price of oil in the last three months, to $92 from $115 per barrel, was caused by Saudi Arabia, according to Abanmy.
With oil demand declining, the ostensible reason for the price drop is to attract new clients, Abanmy said, but the real reason is political. Saudi Arabia wants to get Iran to limit its nuclear energy expansion, and to make Russia change its position of support for the Assad Regime in Syria. Both countries depend heavily on petroleum exports for revenue, and a lower oil price means less money coming in, Abanmy pointed out. The Gulf states will be less affected by the price drop, he added.
The Organization of the Petroleum Exporting Countries, which is the technical arbiter of the price of oil for Saudi Arabia and the 11 other countries that make up the group, won't be able to affect Saudi Arabia's decision, Abanmy maintained.
The organization's decisions are only recommendations and are not binding for the member oil producing countries, he explained.
