Weak oil reserves due to geopolitical tension

Weak oil reserves due to geopolitical tension: With continued tensions in the Red Sea and geopolitical escalation,
the oil supply is at risk.



Weak oil reserves

The US dollar achieves remarkable positivity

Reading US market numbers




Increasing geopolitical pressures and influence weaken the oil supply

Yesterday, Tuesday, the Greek-owned ship Zogrevia was bombed 76 miles away by the Houthi group,
and the US-owned ship Gibraltar Eiffel was also attacked near the Strait of Aden.
These attacks came from the Houthis weeks ago in response to the Israeli attack on Gaza.

The official Houthi spokesman criticized shipping companies,
saying that they only target ships belonging to the Israeli entity.
The official spokesman for the Houthis also warned in response to the British and American naval bombing
of sites affiliated with the Houthis in Yemen,

saying that the ships of those countries had become a target for them.

Tensions in the Red Sea are still continuing and the geopolitical escalation is putting the oil supply at risk.
This comes in light of the change in the route through which the ships will sail,
as they will be forced to cross by circumventing the African continent and avoiding passage through the Red Sea,
which is more dangerous for commercial ships, if it continues,
may It hinder the progress of the economy during the current year,
in addition to the weakness of the oil supply

We add to all of this the high cost that ships will waste
by changing the route and the length of the distance,
in addition to the high insurance costs, which have increased 10-fold to reach 1% of the ship’s value.
This means that a ship worth $100 million will have to pay $1 million to sail through the Red Sea.


The US dollar achieves remarkable positivity

US consumer prices presented positive results during trading on Wednesday, January 10,
with annual consumer prices advancing by 3.4%, compared to a reading that indicated positivity by only 3.2%,
while the reading for November was only about 3.14%.

Monthly consumer prices also presented a positive increase at 0.3%,
which is higher than expectations and indicated a provision of only 0.2%,
and this comes while the November reading was around 0.1%.

The US labor market data has proven excellent strength and reliability in light of high-interest rates about 5.5%.

US unemployment rates stabilized around 3.7%, contrary to expectations that indicated a rise to 3.8%.

Employment in the non-agricultural private sector provided new jobs,
providing a reading of about 230 thousand jobs for December,
which is higher than expectations and indicated a decline and providing only 177 thousand jobs.

On the other hand, wages grew to levels of 0.4%, an increase that may increase
inflationary pressures on the American economy.

Reading US market numbers

After the US Federal Reserve meeting led by Jerome Powell, Governor of the Bank,
last December of the year, it became clear that the Bank would begin
early reduction in high interest rates during the current year.

In this context, the markets began to expect the Federal Reserve to begin cutting during March,
especially with the possibility that inflation would respond by declining.

However, the numbers provided by the American labour market and consumer prices
indicate the possibility that American inflation will rise again,
and the American labour market may put pressure on inflation and push it into a new upward wave.

Expectations have already begun to indicate that the US Federal Reserve
will be forced to lately reduce high-interest levels during the current year,
which led to a noticeable rise in the US dollar index to reach levels around 103.25,
equivalent to an increase of 1.2% from the opening,
and the price of an ounce of gold decreased from the level of approximately 2060 dollars.
It is trading around the 2018 dollar level, with a decrease of approximately 2.05%.


China achieved its growth target for the ending year

After China reached the economic target for the year 2023,
on which hopes were pinned for growth of 5.0%, today the gross domestic product reached 5.2%,
expressing that the stimulus provided by the People’s Bank of China
is bearing fruit without resorting to significantly reducing interest rates so far.

The most important data that contributed to the progress of China’s GDP was an increase
in industrial production by 6.8%, while experts expected a survey conducted by Bloomberg,
where expectations indicated only 6.6%, while an increase in investment in fixed assets by 3%, which is higher than expectations.
It indicates only 2.9%.

Economists expected that the target proposed by China last March was conservative,
but the increasing external pressures in addition to the contraction
in the real estate sector in 2023 represented a danger to reaching the target,
and only in this context did the stimulus by lowering interest rates
and pumping more liquidity leads to reaching the target of about 5 %.

The biggest challenge facing China’s economic growth this year
will be posed by the real estate and construction sector, and in return,
experts expect that the People’s Central Bank of China will implement
massive stimulus and further reduce interest rates,
which is what Premier Li Qiang said in Davos, Switzerland,
saying that the bank reached its targets without Resorting to a massive stimulus
or a significant reduction in interest rates,
which further supports expectations of the form of support that
the bank will provide to the economy during the current year.


Weak oil reserves due to geopolitical tension