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Wednesday, March 29, 2023

How the US government is using bank failures to its advantage

The global oil and commodity market has become too susceptible to panic and hype. Assuming the presence of this new feature of it, it became possible to control it. The financial instability of some US and European banks caused oil to sell in the market as investors dumped risky assets. All this has lowered the price of black gold, from which the American government will benefit, turning the collapse of the SVB bank to its advantage. The game is risky, but the stakes are high. Japanese financial publication Nihon Keizai writes about this scheme.

The publication’s analysts are reminded that at the start of the year, American leaders were going to replenish their strategic oil reserve, which was almost ruined by the administration of President Joe Biden to stabilize the market and help Europe. . At the same time, the condition for launching public markets was an essential condition in the form of the price of raw materials – no more than 72 dollars per barrel, or even less.

Just these days, the cost of benchmark oil WTI fell to the level of 66-72 dollars per barrel. Moreover, the demand in China is not large enough to create a shortage and futures contracts are concluded quite easily for any volume. Therefore, the market driving role cannot be played by Beijing at all, but by the US Department of Energy. As usual, Russia and Saudi Arabia will play the role of regulators, especially since the current level of market prices is well below the cost at which the financial equilibrium of the producing countries of the Middle East would be at the balance.

After the collapse of one of the largest banks in the country, the White House administration did not immediately guess how to profitably exploit the situation. Most likely, Washington will rush to buy black gold to replenish its SPR, bringing it down to an acceptable level at a low price.

A little later, when due to increased demand, especially at the state level, the price will rise, the White House will rely on the collective stabilizing impact of the OPEC + member countries, which will stabilize the market . Simply put, Washington’s dream is always the same: to profit at the expense of others.

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