By James McKee
The crisis in the Middle East has exposed markets to a pressure not seen in decades via rising oil prices. Despite Libya being a relatively small provider of the world’s oil supply investors feared that the conflict seen recently would spread to other countries like Kuwait. This is a perfectly reasonable fear in light of the way in which conflict has spread so far. The USD, EUR and other major currencies have suffered massive downslides as oil has crept up in price due to Middle Eastern conflicts. If the conflicts do not subside the recent drop in the price of oil will not mean anything in light of future problems.
For many countries in Europe and the United States a hike in the price of oil means stunted growth and in possibly even a reversal in the form of job loss and decreased purchasing power. Oil is a component of every product sold in the United States in one form or another, if nothing else an increase in the price oil drives up the price of a product through transportation costs. The USD and the EUR will both drop in value if there continues to be a hike in the cost of oil.
The Chinese Yuan will have some opportunity to appreciate since China is not going to be as affected by the oil crisis in the Middle East as Western countries. There are oil reserves throughout Russia that China utilizes in addition to some they have begun to speculate on in Northern Africa where the Chinese have established a presence. Those on the forex currency exchange should follow the price of oil closely to make sure that they can stay ahead of the curve where a change in the price is concerned. Libya’s leader Gaddafi has openly stated he will not secede from power before he is killed, leading many to question how much longer this conflict will last.
About the Author
Author is a Forex trader and financial analyst residing in Denver, Colorado. To stay up to date on all the latest developments in the financial world and beyond be sure to check out the forex exchange rates regularly.