Noor Trends News, Technical Analysis, Educational Tools and Recommendations
In an interview on Dubai TV, Mohammed Hashad, Director of Research and Development Department at Noor Capital and member of the US Association of Technical Analysts, tackled the latest developments in financial markets, particularly the most prominent one; namely, the surging oil prices that touched record levels, he also commented on expectations that oil prices would reach $200 a barrel, whether that was possible, and whether the global economy, in general, could withstand such levels.
Oil
Oil prices witnessed a strong start during Monday’s trading, reaching 108 dollars per barrel. Last week, when the United States began banning Russian oil, which could lead to a decline of nearly 3 million barrels, we saw oil prices touch 130 dollars.
Accordingly, Hashad believes that if the European Union countries ban the use of Russian oil, this may result in an energy crisis globally, and we may see a barrel of oil above $200.
Russian Gas
Hashad explained that energy is the lifeblood of the European economy and the Russian economy. A recurring source of income for the Russian economy, oil and gas exports account for 40% of its federal budgets and 70% of its export volumes.
Therefore, such a decision is destined to destroy the Russian economy and lead to the collapse of the ruble, which would lead to a significant decline in GDP even if China supports its Russian partner and imports large quantities of Russian oil.
Hashad also believes that China may import Russian oil for a low price, exchange it for other goods, or even buy it in its local currencies. If this happens, there will be no winners in this scenario, either the Russian economy or the European economy.
Fed
Fed Rate hike is seen as a challenge for emerging markets that will lead to a decline in the value of local currencies and lead to an increase in the value of dollar borrowing, thus leading to the flight of funds and cash flows from emerging markets to the big ones markets.