China’s Growth Crisis
China’s economic turbulence has been blamed on the increasing prices of crude. This has contributed significantly to the global economic worries because of China’s almost entirely dependent on oil for the production process. However, the rising economic tension has been counterbalanced by increasing prices of mining and telecom shares in the Euro-market and in the Wall Street.
For example, all-country world index. MIWD0000PUS for MSCI declined by 0.01% while its emerging markets index. MSCIEF increased by 0.09%. An analysis on Street Wall indicated that DJI upped by 9.72 points to hit at 17,158.66 while S&P500.SPX upped by 0.2% to hit 4,891, 43. According to EBS data, yen rose by 0.3% against the dollar and the euro fell by 0.7%.
The oil market issue has caused political turmoil in the Middle East promoting Kuwait to recall its ambassadors from Iran after the Saudi attack by protestors on its embassies (Lash, 2016). The crude oil prices LCOc1 downed by 63 cents settling at $36.58 per barrel while U.S West Texas Intermediate crude oil CLc1 downed by 65 cents settling at $36.12. Consequently, the gold price rose due to risk aversion measures resulting from China’s growth turbulence and tensions in the Middle East elicited its demand. For example, a future February delivery for the US GCcv1 increased by 0.35% to settle at $1,078.4. Reflections on China’s Oil Crisis.
Generally, changes in oil prices consequently, alter the production process since all the factors of production entirely depend on oil energy. A slight alteration in the prices of oil may affect the economy and consequently, social unrest as civilians maybe laid off prompting protests. Additionally, an increase in oil price will be shifted into the final prices of goods and services that may burden consumers and taxpayers.