There (might) Be Blood

17 June, 2019

Sam Roberts

So we have a leadership battle that is not really a battle, unless the new and improved Boris Johnson slips back into his old ways.

Predictions of doom and gloom, ‘The Conservative Party becoming toast’ and war on the horizon have made it a most ‘concerning’ time at the moment.

We have spoken many times about the different social, financial and political matters that have an impact on the currency and stock markets but for today at least, let us look at something different, something overseas that is looming large and can have a real impact on the markets and the economy as a whole. Oil or to put it bluntly, the price and availability of oil.

Ever since OPEC (the Organisation of the Petroleum Exporting Countries) was founded (some might say designed) in Baghdad in 1960 and headquartered in Vienna since 1965, the founding countries Kuwait, Iran, Iraq, Saudi Arabia and Venezuela promised to stabilise volatile prices and provide regular, sufficient supplies to countries that rely on oil as a base.
With the price of oil being a staple in the strength of economies and markets the world over, it seemed only logical that the countries with the largest oil deposits (or veins) should be the ones to guarantee a smooth, steady supply, at a fair price to countries that need oil.

Now senior analysts the world over already know this fact. ‘Oil has no value until it is extracted and placed in a barrel’. Yet because of threats of wars (difficulty in transporting oil), trade negotiation breakdowns (threats using oil) and Government sanctions (‘no’ you can’t play with my oil anymore), global economies seem to be held to ransom far too frequently.

With oil being a necessity in manufacturing countless products as well as fueling cities, homes, and various forms of travel to name but a few uses and our ever-increasing reliance on oil as a species, it is no wonder that the once courtly reasons for having a body such as OPEC, now seem to be questioned the world over.

The U.S relies more heavily on oil than any other country on the planet and lately some of their reasons for ‘defending’ countries which (coincidently I’m sure), seem to have quite large oil deposits seem to be called into question, more and more.

If the U.S takes military action against Iran and Boris Johnson becomes interim leader of our country, then expect Great Britain to take military action too.

With the price of oil currently at around $52.50c a barrel, up 31cents based purely on the rhetoric used by President Trump on Friday, you can expect that price to at least double if military action is taken and remember, oil does not just ‘dry up’ in the ground through fear of war, it is still there regardless.

The American markets have always responded better to war than the British ones and with the pound already weakened by the ‘circus of uncertainty’ that our (alleged) leaders have been showing, you can expect the USD to get stronger against a weaker GBP.

If you are thinking of purchasing in, transferring or exchanging foreign currency, now is really the time to speak with your Currency Consultant at Currency Index.

If things go as they seem to be going, then choosing to wait will not benefit you, as you will be waiting for a while. If you are repatriating funds, then you too have good reason to speak to your Currency Consultant at Currency Index.

Unlike Banks, we do not deal in ‘surprises’, we have analysts, lots of data and Consultants, who will take the ‘guess work’ out of the currency markets for you, so why not give them a call today?