Oil Price Spike Could be Short-lived

When oil demand drops, the trade war is just going to be a handy excuse but it’s not going to be the main culprit. The world economy is in bubble mode for more than a decade now and the chief bubble inflater is China. This will have consequences one way or another and those consequences will not boost oil demand. So, when they hit and the trade war is in full swing, it’s just too tempting to blame it on the conflict. What it will do is that it will convince most people that the world economy would be OK if just this trade war would be over. And as usual, we won’t fix the problem for many more years making the eventual bust even more catastrophic.

That’s according to Janet Kong, who heads energy giant BP Plc’s trading business in Asia. Any spike on the loss of Iranian supply due to U.S. sanctions probably won’t be sustainable in the long run, she said. That’s because the negative impact on demand from a trade war between the world’s two biggest economies hasn’t been priced into crude yet.

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