Brent crude oil, the international benchmark for oil prices, breached US$80 a barrel on Thursday for the first time since 24th November 2014. However, the contract eased back to below US$80. Trading at US$79 now, it appears the commodity is looking for excuse to breach the US$80 again. And it’s President Trump’s fault.
Last week, President Donald Trump announced that he would withdraw the United States from the Iran nuclear deal and restore wide-ranging sanctions on Iran. Essentially, all companies have between 90 to 180 days to wind down business with Iran. However, things get tricky because China and key U.S. allies in Europe still support the nuclear deal.
That probably explains why the crude oil prices pull back immediately after it topped US$80 a barrel. Traders quickly took profits off the table as they doubt Trump could wreck havoc to Iran the same way North Korea was threatened. But even if Trump will be able to disrupt Iran’s crude oil export, analysts believe the sanctions would do little damage to Iran.
While some said Trump’s sanctions could wipe 1 million barrels per day of Iranian crude off the market, others said the impact would be limited to fewer than 500,000 barrels a day only. Furthermore, OPEC members can replace any supplies lost from Iran, not to mention that the U.S. is pumping at record level – more than 10.7 million barrels a day, according to the latest reading from EIA.
There’s one country which is fortunate because they had successfully overthrown their government. Malaysia, after being ruled by Barisan Nasional coalition government for the last 61 years since its independence from the British, has been attracting world attention since its 14th general election on May 9th. Former Prime Minister Najib led the coalition to its disastrous defeat.
There’s a new sheriff in town. Mahathir Mohamad, a former prime minister who ruled for 22 years from 1981 to 2003, has returned – as the country’s prime minister for the second time. He also created a new Guinness Record as the world’s oldest prime minister. At 93, he is older than Morarji Ranchhodji Desai, whom was appointed Prime Minister of India from 1977 to 1979.
One of Mahathir’s policies is to throw away the weekly fuel price adjustments architected by former premier Najib Razak. Since 30th March, 2017, 32-million Malaysians pay for their fuel based on weekly system, which is calculated based largely on the benchmark prices determined by Mean of Platts Singapore (MOPS).
The Malaysian Parliament was dissolved on 7th April 2018, while the Polling Day was on 9th May. When the RON95, RON97 and diesel prices were first fixed at RM2.20, RM2.45 and RM2.18 per litre respectively on 22th March, Mr. Najib deliberately and artificially set them lower than expected, knowing he was going to call for the dissolution of the Parliament 2 weeks later.
On the week leading to 22th March, the crude oil jumped from about US$64 to US$77 on the polling day – an increase of 13 US dollars. Today, it’s close to US$80 a barrel – an increase of 16 US dollars. Had Najib Razak won the election, not only would he become a dictator, his 1MDB scandal would be swept under the carpet – forever.
Had Najib won, the world would not know how his family have been living luxuriously. In what appeared to be the biggest seizure in the history of the country, the Royal Malaysian Police seized 284 boxes of designer handbags and 72 bags of cash and jewellery last night from luxury condominiums belonging to Najib and his spendthrift wife Rosmah.
But more importantly, had Najib won the 14th election; the 32-million populations of Malaysia would today pay a high price for petrol / gasoline. We had earlier estimated (before the polling day) that the fuel prices for RON95 and RON97 could easily jump by RM0.20 a litre after the election based on the crude oil price appreciation – from US$64 to nearly US$70 a barrel.
At US$80 a barrel today, Najib would not think twice about raising the fuel prices for RON95 and RON97 by at least RM0.50 a litre – pushing the RON95 and RON97 to RM2.70 and RM2.95 respectively for every litre. Fortunately the former Thief-in-Chief had lost. Prime Minister Mahathir has simply maintained the fuel price at the same rate it was artificially set by Najib.
It’s unknown if Mahathir government is subsidizing the fuel prices at this moment because the formula to calculate the price is a guarded secret. But even if it’s being subsidized, the government can afford to do so because the nation’s oil and gas company – Petronas – is making huge profit thanks to high crude oil, of which its dividend to the government can be used to offset fuel subsidy.
Sure, some may argue that the subsidy mentality should be discarded entirely. However, Mr Najib had provided a good example of how disastrous the cost of living will be without subsidy, especially to the medium-class and lower-class people. Like it or not, Malaysians still need subsidy on essential goods because their purchasing power aren’t strong enough.
Other Articles That May Interest You …
- First Prime Minister To Be Imprisoned – Najib Razak To Be Arrested & Charged, As Soon As This Week
- Why The Hell Didn’t Crooks Najib And Rosmah Flee Instantly After They Lost The Election?
- Blocked From Leaving Country – This Is Just The Beginning For Crooked Najib & His Family Members
- Oil Skyrockets To 3-Year High – 32 Million Malaysians Will Experience The Biggest Shock In Their Life After Election
- Najib’s “Quinoa” Stunt Goes Haywire – Forget Corruption, His Stupidity Is Unforgivable
- This Chart Shows How US-DOJ Links Auntie Rosie To A $27-Million Pink Diamond
- New World Record – Himalaya Hermès Birkin Handbag Sold For $377,000
- Take A Tour Inside Emirates Airbus A319 That Rosmah Took For Her Cheap Award
- One Big Family Of Crooks? Najib’s In-Law Took Hermes Bags Without Paying
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May 19th, 2018 by financetwitter
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