by Why Did Oil Prices Plunge This Black Friday? Nothing to do with the American super big shopping day after Thanksgiving, but several items, some of which may reverse themselves. As it is, it was a pretty big drop, nearly 5 percent for the day for both West Texas and Brent crude, with the latter now just above per barrel. The big headline is the resignation of Iraqi prime minister Adil Abdul Mahdi. The immediate trigger of that was that it was demanded by Iraq’s most influential cleric, Ali Sistani. This came after weeks of mounting protests in Iraq against the government, both in Baghdad, but also among Shia in the South, with Sistani a Shia cleric. He is based in Najaf, the Shia holy city where Imam Ali is buried, the son-in-law of the Prrophet
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Barkley Rosser considers the following as important: US/Global Economics
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Why Did Oil Prices Plunge This Black Friday?
Nothing to do with the American super big shopping day after Thanksgiving, but several items, some of which may reverse themselves. As it is, it was a pretty big drop, nearly 5 percent for the day for both West Texas and Brent crude, with the latter now just above $60 per barrel.
The big headline is the resignation of Iraqi prime minister Adil Abdul Mahdi. The immediate trigger of that was that it was demanded by Iraq’s most influential cleric, Ali Sistani. This came after weeks of mounting protests in Iraq against the government, both in Baghdad, but also among Shia in the South, with Sistani a Shia cleric. He is based in Najaf, the Shia holy city where Imam Ali is buried, the son-in-law of the Prrophet Muhammed. Protestors had just torched an Iranian consulate there. The supposed reason this might justify a fall in oil prices is that it is thought that the protests have reduced exports from Iraq, which is currently the second largest oil exporter in OPEC. I do not know if that will result, but if indeed this leads to Iraqi oil exports rising, then indeed a price drop is justified.
While less headline-generating but arguably more important are rumors regarding a major OPEC meeting in Vienna next week. Supposedly the Saudis have gotten tired of cutting oil production to offset increases by other OPEC members. This may not help out the ARAMCO IPO going on, with falling oil prices resulting. But that would certainly portend a reasonable basis for them to fall.
On top of that there are also reports that non-OPEC member Russia is now withdrawing from agreements over the last three years, largely with the Saudis, to restrain their production, especially of condensates. This too would reasonably push oil prices down.
There are also reports of snags in US-China trade talks, a less important item that might reveese tomorrow, but one that makes all the markets nervous, and indeed stock markets were down today also.
So, while “Black Friday” in the US means businesses supposedly coming out of negative red territory on their profit accounts, in the the oil patch it looks more like something unwanted, black indeed.
Barkley Rosser