Oil prices fall as China property crisis overshadows Middle East violence
After militants supported by Iran fired rockets that killed American soldiers in Jordan, oil prices initially increased by more than 1%. But later on, worries about China's economy contributed to a decline in prices, which was made worse by the bankruptcy of China Evergrande, a significant real estate developer. Concerns about China's declining demand for crude oil were aroused by the court judgment requiring Evergrande to dissolve. The Middle East issue is also being watched by the market, as tensions have increased following the drone strike on American soldiers in Jordan. The incident was attributed to the Islamic Resistance in Iraq. The Middle East's unpredictability, China's economic woes, and the backdrop of global events all had an impact on the price of oil.
6 comments:
Do you expect this to get worse as the crisis in the middle east in not close to being over?
Last semester I took an International Economics class and had a project focusing on the effects of changes in oil prices. If oil prices increase and China's economy decreases, this will cause financial tension in China as the price of oil creates a domino reaction affecting the entire economy and will eventually affect the world economy. The reason is that the world runs on oil, without it, factories, transportation, and common goods will all be affected. There will be a decrease in factory production causing an increase in goods and services and going from point A to point B will become more expensive as oil becomes limited.
Countries like China are exceptionally reliant on oil so they are willing to pay despite increases; however, there will be repercussions for the other parts of the economy as well the world economic climate.
Considering the uncertainty of the tensions in the Middle East and China's reliance on oil, it will be interesting to see how the prices fare
China's real estate bubble has had alarming issues for over a decade. As more and more Chinese real estate firms go bankrupt and need refinancing/bailouts, one can wonder how much more of this the real estate can take before the chain reaction is set off. I fear when that happens economic disaster will occur globally.
The oil prices are increasing everywhere, at some places faster than others. How long before oil prices go through the roof and common man can no longer afford it? And will the globalization of electric cars and renewable energy for factories occur before oil prices crash the economy and not just of China?
Post a Comment