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02 November 2015
China/Saudi Arabia

As we all know the ecomony of China is growing at less of a pace than in recent years - growth still good in Western terms but not as it was.

As we all know Saudi Arabia have been artificially reducing the price of Crude oil by "opening the taps" and keeping the current oil price at reduced levels apparently in the hope of creating bankruptcies in the US shale oil industry. This is causing great difficulties around the world not only to OPEC members but others outside the cartel, not to mention all the major oil companies (look at the most recent results from Shell, Exxon, Chevron, BP) to get an idea of this. The people who it is not causing much difficulty to would appear to be the intended target ie the US shale oil companies who have apparently just scaled back on production. They are much more flexible than conventional oil companies as they have a much lower cost base.

The solution to this would appear to be a realisation by Saudi that what they tried has not worked and or an upturn in the economy of China either of which would cause the oil price to rise.

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