Interpreting Middle East Economic News and Analyzing Market Trends

Category: Libya

The vanishing petrodollar and its implications on financial markets

 
Petrodollar

Image Source: The Daily Reckoning

It didn’t take long for the effects of falling oils prices to catch up with the global economy.  We’ve reported in the past how falling oil prices will expose the ‘shale revolution’ myth, and we are now starting to see shale companies file for bankruptcy (expect this trend to accelerate through the summer).  Now, however, we are starting to see the effects of vanishing petrodollars from the global financial system. The acceleration of this trend alone can spark another financial crisis.

   

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Worldwide youth unemployment stuck at record levels, outlook for the Middle East is especially poor

Youth Unemployment Global

Click on map for a large image

We reported last year on the terrible outlook for youth unemployment around the world (read the story here).  The map above is an update on this global problem.  The situation is particularly bank for the Middle East and Southern Europe.  The are no indications that this problem will go away any time soon.

 

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China is hooked on Mideast oil, which helps build a good case for a Petroyaun

China Oil Transit Routes 2013Source: Zerohedge (click on map to view larger size)

Last year China became the world’s largest oil importer, surpassing the U.S. for the first time.  The U.S. reliance on imported oil has been declining ever since shale oil production began to rise in 2008.  We remain skeptical on the long-term viability of U.S. shale production, but that’s a different story.  You can see our posts on the subject here and here.  Going back to China, what does this mean for Middle East exporters?

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Shell CEO calls shale revolution ‘hype’ and writes off $2.1 billion as shale ‘revolution’ spreads to North Africa

Global Shale Gas 2012

Source: Reuters

If one of the world’s largest energy producers considers exiting a business and calls it ‘hype,’ we should consider looking into the reasons.  Some would argue that Shell got into the US shale business late, thus overpaying for assets.  We reported earlier on the shale revolution here and explained why it’s hyped up, mainly from Wall Street firms looking to cash-in on a trend.

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The idiots guide to understanding the Middle East

Idiots Guide to ME

Image source: @DismantleFed

 

For everyone out there who’s confused as to what’s going on in the Middle East, @DismantleFed put together a nice graph summarizing all the players, who they play with and who they don’t play with.  Still confused?  Well, this is the Middle East.  Click on the graph above to get a full-size version.