January 10, 2018|

Let’s revisit the blog post, Change is in the Air, that I wrote on April 5, 2017 where I said:

“However, one thing seems certain, there are going to be large shifts in the global power structure when it comes to oil, currency, and banks, which are really at the heart of all the power.”

Things were relatively calm then compared to now.  Since that time, there have been a number of significant events, as well as changes and shifts in global power.  Vladimir Putin continues to flex his muscles and he is having a large impact on world events after being named Forbes magazine’s most powerful person in the world in 2017.

There have been major developments in the Middle East, such as the defeat of ISIS and Russia’s increased involvement in that part of the world.  A worldwide payment system based on an alternative digital currency (Bitcoin and other cryptocurrencies) has taken the world by storm.  It is too early to tell how the new cryptocurrencies are going to play out because there is growing resistance to them from governments and the global banking system, both of which feel threatened.

Geopolitically the world is much more fragile now than it was in April of 2017 because of the highly complicated and rapidly evolving situation in the Middle East and in North Korea.  As the U.S. has been reducing its role on world stage, Russia and China have seized the opportunity and have been making power moves to increase their roles.

It was announced in August of 2017 by Reuters that Saudi Arabia and China plan to establish and operate jointly a $20 billion investment fund, sharing costs and profits on a 50:50 basis.  According to Reuters, in addition to the fund, 11 business agreements worth about $20 billion were to be signed between the two sides.

The oil market has rebounded strongly.  Oil prices are trading at highs not seen since December of 2014.  New alliances have been forged and are evolving, such as the one between Russia and Saudi Arabia.  There has been increasing internal discord among OPEC members and the power which OPEC once wielded over global oil markets has significantly eroded.  The Saudi kingdom is preparing to float its state oil company, Aramco, in 2018. U.S. oil production is forecast to exceed 10 million barrels per day in 2018, surpassing Saudi Arabia and behind only Russia.

We are faced with the threat of a nuclear war breaking out with North Korea, which is something we haven’t had to deal with in over 50 years since the Cuban Missile Crisis in 1962.  Pakistan is an emerging problem for the U.S. and they possess nuclear weapons.

My prediction is that there will continue to be a lot more world changing events in 2018 and global markets will experience high levels of volatility, which directly reflects the high level of global instability.  There is just too much geopolitical instability in the world to expect that markets will be calm and stable.  It will be quite interesting to see how it all plays out.  No one can predict for sure what is going to happen because the world is rapidly changing and all the forces at play are far too complicated and intertwined for anyone to accurately envision what the world will look like a year from now.

By: Ron Clark
ACQU Energy