A.I.M. Users Bulletin Board

[ls7550]

It looks to me that we are seeing some panic, fear, or crowd following selling in oil equities

In the past, crises/conflict in the middle east has led to higher oil prices. This time around we're seeing the US more self sufficient/surplus/exporting shale/fracked energy, and less coordination between oil sellers to fix higher prices. Iran, in having trade restrictions lifted can pump oil knowing that the Saudis economy with whom they have difference will suffer. Saudis were in trade surplus, but have in more recent times been in deficit and eating into reserves to the extent of having to introduce a degree of austerity. For Iran any oil sales/income are more than what they've been accustomed to such that selling at depressed prices isn't really a issue for them.

I'd imagine that low prices could persist for a while longer yet, perhaps even a few years. A form of cold-war. A hot war however would likely reverse that. One aspect of the Saudi spend that has expanded (quite significantly) rather than contract is military spend.