Speculators inflate the oil bubble
Brent’s price of oil came close to $100 per barrel, and other brands (Azerbaijani, for example), have confidently broken the threshold. Earlier, representatives of the Organization of Oil Exporting Countries (OPEC) said that, if this were to happen, an agreement will be made to increase production. But, apparently, a meeting will not be taking place. Iran (which currently chairs the OPEC), as well as Venezuela, oppose. Understandably, they benefit from high oil prices. But there are some more serious considerations: OPEC is powerless to do anything, and that is where they don’t want to lose face.
Even if OPEC holds a meeting, no one will listen, say experts. After all, the price of oil is going up not because there is a shortage of oil, they explain. To the contrary, the demand for “black gold” is falling: today, there is already too much oil. Meanwhile, OPEC can do only one thing: open the cranes and literally flood the world with oil. But this will not help. The reasons for this phenomenon lie in another plane.
In which? Fifteen trillion dollars, which the governments spent to fight the crisis, ended up in the hands of stockbrokers, says Boris Kagarlitsky, director of the Institute of Globalization Studies and Social Movements. Speculators threw that money into the commodity markets, where an enormous bubble is inflating before everyone’s eyes. A similar picture is forming not only with petroleum – but the prices of all traded commodities, such as corn and soy, are sharply increasing. Meanwhile, oil is, as always, in the forefront.
While recalling January of 2008, Kagarlitsky argues: we are repeating the old scenario, and after a sharp rise in the first six months, we will see a catastrophic collapse.
“The collapse is rapidly approaching, we are already standing against the wall,” he says. “But if Russia faced the first crisis with some considerable savings, then today, it does not have them.”
Experts are not surprised by the fact that governments are ready to step on the same rake twice: “For most cabinets, seriously fighting the crisis means fighting with themselves,” says Kagarlitsky. “They will not dismiss themselves, thus they are trying to extinguish the fire without making any structural reforms.”
And if it’s not reforms, then it’s taking money and throwing it into the fire. But paper burns quickly. A second wave of the crisis will force us to shift toward reforms, says Kagarlitsky.
inevitable,” says the expert. As for Russia, our country falls into a rather awkward position. It could, together with Iran and Venezuela, enjoy the rising price of oil – after all, with the price of $110 per barrel, the Russian budget enters a point of “suddenly being free of deficit”, note economists. This means that, if this price remains for a certain length of time, we could forget about the budget gap. But the problem is that everything could shift very quickly: it’s possible that, as soon as in the second half of this year, capital will leave commodity markets.
It remains to hope that it will be possible to avoid the catastrophic collapse mentioned by Kagarlitsky. But it is unclear as to how the situation will unfold. According to experts, for Russia the consequences are ambiguous and have not yet been assessed, but the fact that things are quite bad for the processing industries is indisputable.
Wall Street, it seems, has everyone beat yet again. Except, stockbrokers failed to take one thing into consideration: if a global reassessment of valuables takes place, it will start with them.