Crude price bounces back to previous high of close to $100 because of the recent standoff between the Venezeala government and major oil corporations over disputes of settling nationalized oil assets of these oil companies in the country. The US and British courts have recently given out the sentences of freezing the accounts of Venezeala’s national oil company. Venezeala responded by reducing exports of crude to US .
The demand from China and India will hopefully support higher oil prices over $90 amid cutting output from OPEC. The continual devaluation of US$ is another reason for the fall. The prices of base metals, such as iron and steels, copper will have some support from fallout due to the continual long term demands of China and India. For example, China will have to import a lot of iron and steel to fix and extend her electricity network, construction of bridges and buildings and for her ships. OPEC countries have learned their experience of 1970’s when the oil prices peaked and plummeted to lower than $20, because they did not agree amongst themselves to cut output. This time, each of OPEC country will be clever to conserve output and maintain high price even if here comes US recession.
