Turmoil in Saudi Arabia mixed oil and politics in new ways; UK moved ahead but hit a snag on Brexit in Ireland; China and the U.S. met on trade.
"Opening up [trade] will bring progress, and those who close down will inevitably lag behind."
Saudi oil: Uneasy lies the head… Adding a dose of uncertainty to the global oil markets last week was the highly visible leadership shake-up in Saudi Arabia and related anti-corruption drive. Unlike the past, this shift in the balance of power took place in full view; among those detained was Prince Alwaleed bin Talal, one of the world’s richest people, an actively engaged investor in high-profile companies including Citigroup, News Corp and Twitter.
So far, there’s been no sign of a change in the country’s policy toward oil exports or global trade. Crude oil prices rose, but only by 4% to 5%, and stabilized during the rest of the week; Brent Crude is at $63.58 and West Texas Intermediate is at %56.80.1 But the new leadership has significantly ramped up its anti-Iran rhetoric and actions, which could embroil the global market for oil in regional politics with unpredictable results.
Brexit: Hitting a snag in Ireland The most recent round of negotiations between the European Union (EU) and the UK has become ensnared in the challenges of British-Irish politics. The EU, along with the government of Ireland, have declared their objective of keeping EU-style free trade in place between Ireland, a member of the EU, and Northern Ireland, which is part of the UK. The EU’s stated vision involves the absence of a physical border between the two.
But the UK will likely find that arrangement impossible to make – especially since Prime Minister Theresa May’s coalition government depends for its ruling majority on Northern Ireland’s Democratic Unionist Party, which would be strongly opposed to the arrangement.
China and the U.S.: Trading places President Trump’s extended trip through Asia included two days of talks in Beijing with Chairman Xi Jinping, finding some common ground despite differences. China continued to build on its advocacy of free global trade, while the U.S. reiterated its intention to protect its national interests in any future trade arrangements that might be reached. China also announced the opening of its banking industry to foreign participation, a major change – which could offer foreign support to the challenges faced in China’s debt markets.
President Trump continued on to Vietnam to attend the Asia-Pacific Economic Cooperation (APEC) summit, where the U.S. declared its interest in rekindling trade relationships with “Indo-Pacific” nations, including India.
1 Source: Bloomberg, Friday November 10,2017, 2:50 PM ET