KUWAITCITY(IAMINKUWAIT) : The trade war between the United States and China is the main driver of market developments, he said, noting that it is putting increasing pressure on prices because it means weak global demand for oil by fueling fears of economic recession and inflation.
Al-Shatti said in a statement to «Rai that the market was affected by the developments of the trade war between China and America, and economic indicators show a slowdown in the German economy, as well as the impact of China along with other economies.
Al-Shatti pointed out that US President Donald Trump's remarks on subjecting Chinese imports to additional 5 percent tariffs in response to what he called China's politically motivated move to impose duties on US exports worth 75 billion dollars have fallen with the Dow Jones industrial index for US stocks.
He believed that the escalation of a trade war between the two countries will affect global markets waves of high inflation, which affects interest rates, and low growth of the associated economies.
"In light of the global trade crisis, there will be less demand for oil, which is noticeable in the latest forecast of the oil industry, especially for the years 2019 and 2020 because of the slowdown in the pace of production and global manufacturing," Shatti said.
"It is also possible that we will see a recession, which will undoubtedly affect the financial situation of producers in general and countries with direct or indirect links to America and China. The negative impact may also include the petrochemical industry."
He stressed that producer budgets are directly dependent on oil prices, despite all the geopolitical tensions and production cuts in Iran and Venezuela, and the continued alliance of producers in the agreement to reduce production, but oil prices are still below $ 60 a barrel.
He pointed out that in the absence of signs of a solution to the trade war between the United States and China, there is the possibility of falling oil prices to $ 50 a barrel, although the second half of this year is witnessing an increase in demand for oil, and the increase in the operation of the refinery rate in general.
For his part, member of the faculty at the College of Petroleum Engineering at Kuwait University, Dr. Ahmed Alkouh, the US-China trade war, the effects of the recession will hit the markets, and a slowdown in the economy, including oil will affect the entire industry.
Al-Kooh said in a statement to Al-Rai that the Chinese economy is the second-largest in the world, and there are signs of slowing its growth in the last half of this year compared to previous years, as well as the US economy is facing a decline in some indicators of growth.
He said «the US-China war, which began almost a year ago has a negative impact on the economy of the two countries and the world», pointing out that the high taxes on products imported from the two countries affected the factories and export operations, in which case the factories will go to stop exporting, or charging amounts to the economy the local.
He explained that the American-Chinese conflict has two aspects, the first is actual, and the second myself. As for the actual impact, the factories have started to reduce their exports and production, thus reducing the consumption of oil around the world.
On the psychological side, it affects the outlook of the local market and will reflect on oil prices significantly in the coming period, which means that things may get worse.
Al-Kooh predicted that there will be a slight rise and fall in prices to revolve between $ 55 and $ 70, but these prices are starting to normalize now, as happened during the conflict in the Arabian Gulf Sea, where we did not witness significant changes in oil prices, but were minor, At the same time a significant decline in prices.
Courtesy : alraimedia.com