Matt Badialli Outlines the Factors that Might Lead to an Increase in Oil Prices

Matt Badiali believes that although oil prices have remained low since 2014, the chances are that they would rise again. Matt Badiali predicts that the prices could go up beyond a hundred dollars per barrel. He said that those entering the market today might get very high returns because the geopolitical factors lead to that direction. Geopolitical changes affect oil prices in one-way or another. For instance, if there is tension, the oil-rich countries stop exporting oil and the supply becomes lower than the demand thus pushing the prices higher. Matt Badiali explains that the dominance of the American Dollar in the oil market will soon end because of the competition from the Chinese Yuan.

He continues to say that all oil-exporting countries use the American Dollar because its exchange is easy internationally. Badiali notes that China is slowly coming in with the Shanghai free trade zone that will allow the future crude contracts to trade in Yuan. Matt Badiali advises those who want to investors who wish to invest in oil to watch out the growth of the Shanghai international oil exchange. According to Matt Badiali, another geopolitical factor that could lead to an increase in oil prices is the war in Yemen. He notes that Saudi Arabia produces around thirty-six percent of the crude oil used globally and the continuous conflict between Yemen and Saudi Arabia might affect the oil exports.

He warns that if that happens, the 9.9 million barrels of oil produced by Saudi Arabia would be a disaster in the oil market. He notes that if the war escalates, the Yemen Houthi rebels will attack oil tankers from Saudi Arabia passing through Bab al-Mandeb Strait that might affect the global oil supply. The current conflict between the United States of America could lead to the rise in oil prices. If Iran decides to go against the deal of exporting 3.8 million barrels of its daily oil production, there would be a severe oil shortage in the global markets, and the prices would rise. Venezuela financial crisis is another factor that continues to affect oil prices because of the drop in its oil production.

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