The fall of oil prices .. on himself earns Trump

An analytical report published by the British Middle East Web site said oil prices were falling. "Trump and Saudi influence - what makes oil prices fall this way?" On the role of US President Donald Trump and Riyadh in this sudden and dramatic decline.

The article points out that the decline in oil prices, although it is in the interest of Tramp and its allies, it will come back to them in the near future with expectations of slowing the wheel of the US economy and the world.

Analysts say that Saudi Arabia's increase in oil production is not the only reason for the drop in oil prices globally, but other factors have an impact in this regard, including the link to the production of shale oil in the North American oil production.

Economist Simon Constable says the understanding of the oil market is like watching a multidimensional chess game, where many animations sometimes interact in unexpected ways.

Rapid decline
Since early October, future oil prices have fallen by almost a third in value, and Brent crude recently reached a level of $ 59 a barrel on the market, a 32% decline from the previous price. Year, according to data from Bloomberg.

The price drop is partly due to a significant increase in production, said economic analyst Matt Diyali. "There is a lot of oil in the market."

The reason is that Saudi Arabia - and some others - has increased its oil production. The rise in Saudi Arabia's latest production was probably in response to President Trump's concern over rising oil prices, said London-based economist Constantinus Venetis.

One of the reasons for the drop in prices is that high oil prices - according to Fenetis - will result in additional taxes on consumers who will participate in the elections. Trump focused on oil prices because American citizens who suffer from financial distress often show their dissatisfaction In the elections.

According to the author, oil prices are determined globally, so the fall in prices in Europe is usually offset by a decline in the US, meaning that it does not matter whether the United States buys a teaspoon or a tonnage of crude oil from Saudi Arabia.

Against Iran
Between September and October, Saudi Arabia raised its oil production by 127,000 barrels per day, according to data from the Organization of the Petroleum Exporting Countries (OPEC), the United Arab Emirates raised its production by 142 thousand barrels, as did other countries, Which contributed to the compensation of what Iran produces.

This is where things are clearer. Sanctions on Iran means not allowing it to export oil. To fill this deficit, Washington's allies - particularly Saudi Arabia - have to increase production to keep prices down, especially as US sanctions come into force earlier this month.

On the other hand, Russia - which is not a member of OPEC - has increased its production by 260,000 barrels per day and US oil production jumped by 850,000 barrels per day.

In 2016, when oil prices fell below $ 36 a barrel, some US producers stopped drilling because they cost more than the open market price, and pumped back when prices rose.

Now, US oil production is "more than double the level 10 years ago," according to a recent report from the Financial Mediation Company. In other words, the United States is swimming again in oil, which means that "the offer is only part of Story ", which Trump is currently missing.

Slow the wheel of the economy
As is known, oil consumption and production determine its price, and the economic growth rate helps predict consumption. Therefore, when growth slows, most traders and economists expect lower fuel consumption.

"The rapid decline in crude oil could signal a broader global slowdown," the latest data from Europe, Japan and China indicate that external economic growth has slowed.

Saudi Arabia raised its oil production by 127 thousand barrels per day in response to the request of President Trump (Al Jazeera)

In addition to the United States, this country accounts for 86 percent of the world's total gross domestic product, and here the issue is really worrying.

Since the Second World War, the world economy has been pulled along with the strength of the United States, when the US economy grows, the world economy grows. The United States is about to see a dramatic slowdown, according to Charles Dumas, chief economist at TS Lombard.

A recent report pointed out that this was due to the continuing trade war between the United States and China, in addition to the high dollar exchange rate, which makes exports more difficult.

If Dumas' predictions prove correct, it is likely to consume the least amount of oil in the United States, and this is what the oil market might expect, and therefore lower prices.

The irony is that all this economic gloom, if it were achieved, would be easy to point out to Trump himself as being partly involved in the collapse of oil prices. While the US president boasted of a fall in the price of oil, that might actually be a sign of economic decline.