The escalation of popular uprisings in the Arab States continues to exert upward pressure on the price dynamics of most commodities. The growth of quotations is observed not only in the segment of grain crops, more expensive hydrocarbons, precious and industrial metals. At the largest commodity exchanges almost every day are recorded and a new local historical records in the prices of oil, silver, coffee, cocoa, cotton, live cattle, etc.
Political unrest in the Arab world, bad weather conditions in the producing countries of agricultural products, ultra-loose monetary policy in the US (and as a consequence, the weakening of the USD), as well as administrative restrictions on exports and the growing demand for commodities around the world are pushing quotes higher and higher.
In the last week, of course, the top gainers were the oil contracts. Against the backdrop of unrest in Libya speculators "inflated" prices for "black gold" to the heights last seen two and a half years ago. The reasons for the growth associated with concerns about export supplies of Libyan oil. Recall that Libya is a member of OPEC and across the country are important oil pipelines, in which hydrocarbons (65% of total exports) go to Europe. At the same time against the backdrop of unrest in the country, many companies have stopped oil production, and in various mass media there is information about the impending explosion of a key pipeline. In the end, under the threat of failure was all oil supplies from the Arab state, and this is no less than 2% of world production.
The situation might be less alarming if Libya was an isolated incident, but the events occurring in neighboring Algeria, also a large exporter of hydrocarbons, suggests that problems with the supply of raw materials can occur throughout North Africa.
Not worth the discounted Saudi Arabia. Although king Abdullah II was able to temporarily "off" from the dissatisfied population with promises to allocate in the framework of social assistance about $35 billion, there is no guarantee that this will be enough to calm the masses. In the case of unrest, the Saudis, the price of $200 per barrel might seem still too low.
Thus, at the moment we are seeing self-sustaining growth in the world commodity markets. Namely, higher prices for agriculture (primarily grain) led to a sharp rise in price of food in developing countries, including in the middle East, which resulted in riots and disruptions in supplies of energy resources from these countries, thereby inflating the price of oil. The worst thing is that a universal rise in price of hydrocarbons will lead to further increase in the price of food and other goods, in the end, all in circles...
And if until recently, developed countries could ignore the events in commodity markets, it is now, when oil prices went up sharply, echoes of discontent global inflationary pressures heard on both sides of the Atlantic. After all, the US and Europe are key importers of hydrocarbons, and high oil prices undermining the already fragile recovery of developed economies.
As a result, in the foreseeable future, the question may arise about tightening monetary policy in the United States. Although representatives of the Federal reserve will delay such a decision until the last, and only when the inflation wave will overtake the US, you can expect from the main world Central Bank action. The problem is that by the time inflation costs (caused by rising prices for raw materials and commodities) in most countries can accelerate to obscene proportions, since wandering in the markets of dollar liquidity will "seek salvation" in real assets such as agriculture, metals and hydrocarbons.
Thus, the current hysteria in the commodity markets quite possibly just the beginning of a larger growing trend. And Libya is not the last victim of the American "printing press". Unfortunately, nothing in the modern world does not go unnoticed, and in the context of this irresponsible monetary policy led to the quite natural consequences – "spraying" of dollar inflation around the world. So, on the backdrop of the Davos conversations on globalization, shared responsibility and the need for mutual aid, some countries, in an unsuccessful attempt to save their own economy, and to destroy other States.
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