S.I Onwuka
What is the likely scenario for a possible contraction next year 2018? it may be led by a further recession in China, it may be led by sudden dives in Russia market, perhaps crude oil, housing bubble, perhaps energy, etc., or perhaps Brexit from Euro are likely factors and scenarios that can trigger International contraction, or most perhaps the Euro decision to block bitcoins. For welfare statistic it could be the compounding view of house hold management, or a conjugated Federal Reserve bump in 2018 which has led to bond alternative as if they are avoiding a sharp rise in Energy to avoid a classic case of dollar devaluation.
We beg to move that the political instability of International and third world markets is sufficient to consider government intervention in Crude oil as a possible trigger for any contraction in the market next year. There are signs that crude oil price may play more role than expected, in part third, world economies have never seen action like the years we have seen the ridiculous $97 a barrel.
International markets such as Nigeria is a case study for 2018, for President Buhari’s refusal to release done oil following the compulsory cap of $500 million that the tankers are asking for. The Nigerian Oil scarcity for Christmas and New Year is a litmus paper on the world’s global likely scenario for 2018, a point to be made about Libya’s fractured oil pipes, wasting over 70 thousand barrels a day to the dismay of the public and OPEC’s likeliest actions.
There is no question that crude oil will play a role in the world market in 2018 but exactly how is the question? It is the OPEC expectations against the heavy bonds released by U.S Federal Reserve and European Central Banks – that Crude Oil will experience expansion in 2018, a theme borrowed from the operational framework of the current U.S administration and the Republican Donald Trump, in a year that may begin an international claw back in America and in a year that will force government actions in World markets.
This OPEC position is generally a forecast not necessarily a premise, to the point that some of the development in world markets especially in OPEC countries such as Nigeria and Libya is not sufficient to create the dent in the world markets but are symptoms of later day impact of the first world markets, as if what happens in the third world will also affect the first world market.
U.S, with 1.5 million oil wells can force the price of Crude oil to shift to any direction, to a course that Shale oil in U.S is one of the largest reserves in the world is selling at $60 a barrel $3 slightly above OPEC still bullish on crude oil with emphasis on its over-capacity and the shrinking glut.
For the demographers, the year is 2018 for U.S market, we (a) to 1968 – the year of political instability in Vietnam and the Vietnam war that characterized American attitude to the rest of the world, putting a funk on the national CPI – Crude oil, a case of international instability, similar to (b) 1978, 1979 Jimmy Carter’s administration were years of attrition leading to the political catharsis of 1979 where the problems of International politics, the fall of Shah affected the cost of Crude Oil price and world market. (c) 1988 were retractions based on the sale of Crude Oil leading to collapse of Japanese market and then the word, but since(d) 1998, the collapse of Crude oil price that affected the Russian economy and major investors called Long Term Capital Management, the world energy has since changed especially in Russia struggling to avoid the mistakes of the past has since consolidated its hold on majority of its Crude oil and gas line.
It is unnecessary argument that the blow hot crude oil price of 2008 will ever return, which is not not idle conjecture for failures of world markets to keep up with production, but for the fact that those crude oil years have forced U.S to take action with the Shale Oil there is unlikely surprise in the energy in spite of the projected hike of Fund Rate
The Only possible factor that is likely to impact Crude oil is Russia, but a glossary of the crude oil magnets operating under Putin, Rosneft, Lukoil, Gazprom Neft, Surgutneftegas, Tatneft are power houses that may make the case very unlikely. We take care to mention that since linking Siberia to China, the Asian giant has since enjoyed a cushion against the bumps from Crude oil and like the low inflation enjoyed by U.S through Shale-oil, China has remained flat for sometime.
It is unlikely that the scenario will continue, for it seems that Siberia’s link will provide a new paradox for trans-Siberian corporation between Russia and Rep of China. It leads elsewhere that Russia has not shown any real restrain from the impact of Crude oil on its economy. Putin and the economy is still staggering behind the fundamental funk associated with crude oil and gas politics, to a point that a likely contraction even for crude oil may force the hands of the Putin and Mendelev government, yet how else could China be expected to act, that an expansion of crude oil Russia may throw on new found prosperity that is Russia but will turn to be become a likely factor in accessing inflation in China.
There are other issues of civil unrest in China over the visible gap between the poor and the rich, and any possible hint of inflation will likely escalate.
The old paradox of Russia/China is theme of global expansion and contraction at home, a sickness familiar with Communist nations with compulsory unemployment, ridden to China still expanding abroad but struggling with inflation. We premise from the new paradigm that an expansion of Crude Oil even a few bases away from $60 a barrel may likely impact China. The bait is Russian market, the forecast begins its deals with OPEC to shelve 1.8 million a day, and the outcome is that Russia and compeers is hoping to stimulate demands against the Vega Kurtosis of 2017 crude oil disappearing glut.
It goes without saying that the consumption of Crude oil has taken new meaning since China surpassed U.S as the largest consumer of Energy in 2011 and Russia topped Saudi Arabia as the largest producer of Crude oil. These markets are U.S deferred and are now consumption market defacto for Crude oil world. In essence, the Russia-China link is an economic measure and indicator that may likely play a role in the future, and may likely remain the case until Russia successfully ween from Crude oil.
The point does a better job is that some of the links between OPEC, International Markets, BRICS –active through Russia, that it may be said that some of the challenges that the world markets may likely face may probably arise from OPEC countries, to a point that Nigeria and Libya does not seem to figure in world’s power crude oil houses saving a block with OPEC, yet it’s challenges is moral hazard to the larger world.
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