And perhaps the global economy as well. Like Dr. Roubini, I am not convinced that Chinese growth is entirely independent of US growth. China may be more like Mexico than many think. Exports to the US (using US import data) account for over 10% of China’ GDP now. Sure, lots of Chinese exports come from the reprocessing trade – importing parts for final assembly. But Mexico does its own share of reprocessing as well.
It is enough to make me wonder whether oil should be trading at $70 plus. Particularly with high inventories in OECD countries. And by some accounts (notably that of Ben Dell of Bernstein Research), global spare capacity is beginning to rise. Check out the Capital Spectator’s post on fear v. fundamentals – it is my source.
But then, well, pick up a newspaper. The Levant doesn’t have oil. The Gulf does. But the big players in the Gulf have a range of interests in the Levant. And the Gulf itself has no shortage of flash points.
(Mr Shahristani) said that the government had managed to curb smuggling by reducing subsidies – a policy initiated last year and which is expected to lift the budgetary burden on Iraq’s government, which spends several billion dollars a year to import refined products.
…. His ministry has also reduced fuel rations to Basra’s fishing fleets, who take it down the Shatt al-Arab waterway to the Gulf to sell – a policy enacted under Saddam Hussein’s government to encourage sanctions-busting smuggling. Basra fishermen freely admit that they make far more from the trade than from fishing.