Crude oil continues to decline due to lowered demand, and the petrodollar seems threatened, losing interest. What is the best strategy to take now?
Oil prices kept falling this week, driven by potential progress in Ukraine-Russia talks and a potential slowdown in the Giant Panda’s (China) economic growth due to epidemic lockdowns in some regions where a surge of Omicron was observed.
As I mentioned in my previous article, India considers getting Russian crude oil supplies and other commodities at a reduced price by settling transactions through a rupee/rouble payment system. Meanwhile, we keep getting rumors – notably reported by The Wall Street Journal – that Saudi Arabia and China are also currently discussing pricing some Saudi oil exports directly in yuan. The Chinese are actively seeking to dethrone the dollar as the world’s reserve currency, and this latest development suggests that the petrodollar is now under threat.
The recent correction in crude oil, happening just seven days after reaching its 14-year highs, might show some signs that the conflict in Ukraine will slow down consumption. On the other hand, if Iranian and Venezuelan barrels flooded the market, we could see crude oil, petroleum products, and distillates turning into new bear markets.
