Oil traders ignore unrest
The confrontation is having almost no discernable effect on oil markets, despite the fact that the two countries are massively important to world oil supplies. WTI and Brent continue to lose value at an impressive rate, with Brent dipping below $34 per barrel during intraday trading on January 7. Despite the traditional market jitters that take place when violence erupts in the Middle East, the world remains woefully oversupplied.
In fact, 2016 started off with a rash of bearish news for the oil markets. Global financial turmoil is easily eclipsing the Saudi-Iran conflict in terms of importance for crude prices. China’s stock market was shut after 30 minutes of trading on January 7 after the markets fell by 7 percent. That was the second time in four days of trading so far in 2016 that the markets were shuttered after the “circuit-breaker” was triggered, a backstop measure intended to prevent panic selling. The beginnings of another stock market meltdown is reverberating around the world. On January 7, the FTSE 100 was off 2.6 percent during midday trading; Germany’s Dax was down by more than 3 percent; and the Dow Jones opened by moving down another 1.5 percent.