Oil

Fascinating chart showing the breakeven costs of oil. Canada looks in trouble on this chart and you can see why the Saudis are so comfortable letting the oil price collapse – hurts US shale industry which has the second highest cost price and Russia too.

 

Source:FT

Emerging Markets

It has been a wild ride the last few weeks with oil collapsing and Russia facing a serious recession as the currency has collapsed. The following chart shows how serious this crisis has been. I had hypothesised here that Saudi Arabia was helping the US to get the oil price down to hurt Russia. It undoubtedly did so but perhaps I was wrong (or half right) – perhaps the Saudis want to hurt the US shale oil industry while they are at it? if this EM crisis continues things could get interesting, very interesting…..

 

Oil

Found the chart that proves Saudis dumping discounting oil (to help US Vs Russia is my theory).

 

A 20% fall in oil has two effects. The first is it boosts GDP as input costs are lower but the other effect is knocks approximately 0.5% of global CPI. When the world is worried about deflation this may not be a good thing….