China Could Cause The Next Massive Crash In Oil Prices

Slower economic growth and a huge debt bubble pose a tremendous risk to oil markets

Given the extreme disconnect between China’s huge economy-driven oil and gas needs and its minimal level of domestic oil and gas reserves, the country’s influence over oil prices has long been profound. As a result of this imbalance, China almost alone created the 2000-2014 commodities ‘supercycle’, characterized by consistently rising price trends for all commodities that are used in a booming manufacturing and infrastructure environment.

This was a product largely of the 8 percent-plus annual GDP growth recorded by China over that period, with many spikes well above 10 percent and only a relatively short move down in economic growth at the onset of the Great Financial Crisis.

Aside from huge quantities of imported oil and gas, this massive economic growth was fuelled by enormous debt piled up but then hidden away in various financial mechanisms that China believed it could simply pay off eventually through its rapid economic growth. Developments in the last week or so hint that both of these bubbles may be set to burst, taking the big bid in oil out of the market.

Yellen Warns Debt Ceiling Failure Would Be ‘Catastrophic’

Extraordinary measures to keep paying the government’s bills

Treasury Secretary Janet Yellen told lawmakers Wednesday that they must raise or suspend the limit on total U.S. debt before August 1, or risk incurring “absolutely catastrophic economic consequences.”

A two-year agreement that has suspended the debt ceiling expires after July 31, at which point the Treasury would take what it calls extraordinary measures to keep paying the government’s bills. In the past, the Treasury’s extraordinary measures have provided a cushion of several months, but massive spending on Covid relief programs has muddied the financial picture. Speaking to a Senate subcommittee, Yellen said the government could run out of money at some point in August, possibly when Congress is out of town on its summer recess.

Global finance and economy


Are we on the edge of another 2008-style financial crisis this autumn or are the early signs of a recovery starting to emerge with some slight improvements in the money supply data and strong hints of more stimulus from the global central banks? The Olympics in London are the epitome of … Pump up the money supply and that has nasty side effects, like the high oil prices that are a tax on the global economy that goes straight to the Oil States. ArabianMoney can see that is having a … — Tue, 07 Aug 2012 23:31:37 -0700



In 1997, China worked with ASEAN to tackle the Asian financial crisis. China persisted in not devaluing the renminbi, thus contributing to regional economic and financial stability. During the recent global financial crisis in 2008, China took a … — Tue, 07 Aug 2012 22:59:36 -0700



There have been a few countries like Vietnam, Cambodia that have suffered some imbalances during this global financial crisis and some macroeconomic challenges but they have largely overcome them,” he added. ASEAN groups Brunei, Cambodia, Indonesia, Laos, …. The region contains three of the four global BRICs (Brazil, Russia, India, China), seen by economists as the future growth leaders in the world economy. The Asia Pacific region accounts for 60% of the world's … — Tue, 07 Aug 2012 22:56:36 -0700



A sluggish global economy has only made the blow harder.) … Global investors rushed to finance new vessels needed to haul coal and copper to China's humming factories and to transport finished electronics, toys and other exports out. — Tue, 07 Aug 2012 22:50:55 -0700



Anirudh Sethi Report is now available on your Hand-held & Mobile Devices; Stock Market & Economic Analysis – Unbiased, Objective, and Slightly Rebellious… Our edge … DEBT BOMB – The Global Financial Crisis Stripped Bare. 08 August … — Tue, 07 Aug 2012 22:15:58 -0700



Despite the downturn, the global economy has expanded, albeit at a slower pace than in 2010. This year the U.S economy has grown by 1.8 per cent, and the GDP of the troubled eurozone rose by 1.6 per cent in comparison to 2011. Asia has … — Tue, 07 Aug 2012 22:12:43 -0700



African economies face down European storms

This decline matters for Africa, where public finances are under duress as hard-won fiscal buffers – which allowed some countercyclical spending when the global economic crisis first struck – are now largely spent. Ambiguous effects … — Tue, 07 Aug 2012 22:00:35 -0700