Black Friday hit world stock markets causing almost three trillion dollars in losses. As I predicted, this summer’s crash initiated a far larger crash cycle that is now returning with a fury. The Chinese contagion that was said to be “contained” by our leaders is anything but contained. It is now clear China’s economic crash wasn’t averted; it was just temporarily masked and delayed. Further, oil prices continue their steep decline and now are under 30 dollars a barrel. Also, 2015’s economic numbers are in and 2015 was the year global economies fell back into chaos. With compounding bad economic news in all markets globally, what can we expect going forward?
I have for years told advocates of energy independence that it isn’t $200 dollars a barrel for oil that I fear, but rather $20 a barrel. Most “experts” thought that by reducing our reliance on Middle Eastern oil supplies, we would somehow achieve greater stability. I correctly warned that if you want to see real chaos, drop the oil prices to $37 or below. Well, today, oil prices broke below the key technical floor of $30 per barrel and barring any intervention by Saudi Arabia to reduce oil production, we are going to soon test the $20 mark. Even before hitting the $37 mark, it was clear stability in the Middle East had gone from really bad to near worst case scenario. At the $20 per barrel mark something must break. Whether Saudi Arabia takes and knee and gives into OPEC pressure to cut production or a war breaks out, no oil producing country can continue to endure this price point much longer. This downward spiral in the oil market will only add to the vast problems in the Middle East and before the region rebalances, it is very likely more countries will collapse. With near certainty, the old geographic boundaries of the Middle East will be completely redrawn and it is increasingly likely we are seeing the first waves of what will eventually turn into a major collapse of Saudi Arabia. Read more
