Within 48 hours, oil prices have collapsed in the world and dipped below the price level of $110/b, following word about the former president's plan, "Project Freedom", that put the USA on the brink of disaster.
The move triggered a dramatic turnaround in world energy markets, which caused oil prices to plummet almost 6 per cent as the anticipation of future geopolitical- and supply-side shocks receded. Investors quickly sold off news, sending oil futures and other energy prices to the ground, market analysts said. The drop has ended weeks of broad swings that have sent crude prices flying.
Brent and West Texas Intermediate (WTI) also slipped as traders have taken the view that near-term global disruption to energy supply chains from world oil supply chains to commodity supply chains is comparatively prone to reduce within those weeks or so, the investors said.
Margins on speculative trade and bookings on profit had pumped up energy analysts with increased speculation and demand for profit-oriented behaviour after the advance in oil prices over the previous few weeks slowed the drop. Global demand is regarded by analysts as weak; economic growth remains sluggish for now, thus making price pressure worse.
Yet a clear suspension of “Project Freedom” is one of the central fault lines between political and financial interests. The specifics of this project were yet to take shape before the market feared this: political divisions and a miserable experience with oil export zones would follow.
One thing investors are concerned about, however, is changes in government and new policymakers that will impact the global energy market. A new geopolitical flare-up or production restrictions imposed by many of the world’s largest oil producers could send prices soaring again.
The sharp decline in oil prices has lifted inflationary pressures, transport costs and household spending in countries where oil is an important source of revenue, such as India. If oil prices don’t rise or fall still further, economists say that should relieve pressure on global inflation and give a jolt to investors in the weeks ahead.
