Record High for Oil
Oil prices surged to the highest in 2 and a half years on Wednesday, rising nearly 2 percent. Two major contributors to this are political tensions in Iran, and strong economic outlooks from USA and Germany. After 6 days of civil unrest in Iran, oil purchases spur on.
Unrest in Iran
While Donald Trump is tweeting to the Iranian government about civil liberties, there is a buying surge for oil. Iran is an OPEC member, however, protests against the corrupt government have not hampered production. As a result, a buying surge is a natural response to even the slightest threat in an OPEC nation.
We must remember though, prices could see a dip as outputs in the US continue to steadily rise.
OPEC member, even though oil production not hampered yet, buying surge, prices could see a dip with rising output from U.S.
USA & Germany
Iran’s unrest is not the only factor in rising prices.
“While the Iran tensions are certainly a factor, the slew of remarkably strong economic data today is also forcing the rally,” said John Kilduff, partner at Again Capital LLC in New York (Reuters).
Germany experienced an unemployment rate low in December, boosting its 2018 economic outlook.
Likewise, USA’s manufacturing and construction reports have raised the Dow Jones Industrial Average to a record high. Furthermore, increased factory activity boosted outlook.
Two other factors are part of high prices.
Russia continues to comply with reducing output in 2018, which cheers up prices considerably.
The second factor is not a pleasant one for North America. The East coast is experiencing unusually frigid weather, which has increased demand for heating oil and diesel from Europe. This reverses the traditional trade route, and is hiking processes up.
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