On Monday, Jan. 18, 2016, the Iranian government called on its oil industry to open the taps of production. With international sanctions being lifted, the move could, and most likely will, add to a global glut of crude oil that has sent the price of oil into a tailspin. With enough oil to fuel an entire state’s driving needs already supplying the global market, benchmark prices are edging further below $30-a-barrel. This can be chalked up to traders considering what Iran’s production of new oil will mean to the market. Now that sanctions associated with Iran’s nuclear program have been lifted, Iranian oil production promises to introduce new competition to the rest of the world.
The heavily-indebted companies of China continue to put increasing pressure on the People’s government. China has seen three decades of double-digit growth and, as a result of industries like shipbuilding, auto manufacturing, and coal mining borrowing from state-run banks, the slipping rate has caused many companies to see their cash supplies dry up. As global investors become more weary about their position in the country’s economy—and as the price of oil continues to devalue—companies are being forced to cut prices, where they used to rely on these marked up costs to help pay their loans. The corporate issues facing the government are making it more difficult to manage the economy, and the stimulus measures being pushed are leading China down the road of more borrowing, leaving them in a vulnerable and unfamiliar place.
[pullquote align=”full” cite=”” link=”” color=”” class=”” size=””]…indebted companies of China continue to put increasing pressure…[/pullquote]In other oil news, the Koch brothers-owned Flint-Hills Resources is offering to take oil off people’s hands. The company is offering to purchase oil at 50-cents-a-barrel, meaning that sellers are expected to pay Flint-Hills for the company buying oil. The company, which was paying $13.50 just one-year-ago for the same exact barrels of North Dakota sour, has lowered prices to an all time, and potentially historic, low. This stunt comes on the heels of falling oil prices that have been the result of oversupply in international markets. Many experts say that, in North America, the heavy investments in oil production during years of high prices is now leading to today’s slumps. The expansion of the Alberta oil sands and America’s shale oil fields are two major areas of investment that are now feeling the strain of the bottoming out of crude oil.
Finally, high prices at grocery stores are here to stay—at least for the foreseeable future. Over the next few weeks, consumers can expect to continue to see higher prices of produce, especially from areas like California and Mexico, as the weak Canadian dollar and the effects of extreme weather deplete supplies in chains like Sobeys and Zehrs. With the flooding caused by El Nino, leading to smaller crop yields, prices that are already raised will be seeing an additional increase. Many grocery store chains hope that, in the next few weeks, the west coast will resolve some of the issues and strain felt by the companies, which are struggling with the worst situation surrounding imported fresh produce in 30 years.