A Disturbance In The Force

There seems to be a disturbance in the “world oil order”. The longtime Saudi Arabian-U.S. oil alliance is under stress at a very critical time just ahead of U.S. sanctions on Iran and right before demand surges ahead of winter and demand to rebuild the South Eastern states hit by Hurricane Michael. President Donald Trump said he would impose a severe punishment on Saudi Arabia if it is proven that Saudi Arabia murdered and dismembered reporter Jamal Khashoggi, who was seen on tape entering the Saudi consulate in Istanbul on Oct. 2. There are rumors that his murder was recorded on his I-watch. The Saudis, on the other hand, are denying it and are threatening to lash back at the United States if they try to punish them. The Saudis reminded them of their influence on global oil prices and say that the kingdom “plays an impactful and active role in the global economy.”

The story sent oil on a Sunday night surge only to be brought back down by global economic growth concerns. President Trump, in a 60 Minutes interview, is vowing more sanctions on China and it appears that other countries are now also pressuring China to play by the rules. Reuters reported that IMF managing director Christine Lagarde said that the IMF should be “looking at the distortionary effects of state subsidies, improving the enforcement of intellectual property rights, and taking steps to ensure effective competition – to avoid the excesses of market-dominant positions, Lagarde did not mention China, but all those issues are charges frequently leveled by the Trump administration.

Stocks are also feeling the impact from the Brexit. The Guardian is reporting that Brexit talks have hit a significant impasse over the issue of the Northern Ireland border, British government sources have claimed, increasing the likelihood of a deal being achieved only at the last minute, if at all. After the Brexit secretary, Dominic Raab, flew to Brussels on Sunday for talks, it has emerged that a deal is being held up by renewed differences on the so-called backstop arrangement insisted on by the EU to prevent a hard-Irish border. A hard Brexit means a hard border – whatever Owen Paterson says.