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Top 5 stories of the week: Global oil crisis dominates the headlines

Ben Weiss, Thursday, 19 September 2019

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Two oil bases in Saudi Arabia were attacked at the weekend by drone strikes said to be from Yemen rebel fighters, though suspicions that Iran were involved are high. So what? Big deal. No person was harmed and only a little oil was affected yes? Wrong. These bases were some of the largest in the world and contribute towards 10% of the global oil supply… Cue oil crisis.

Global oil crisis

Brent Crude soared 20% as 5% of the world’s oil supply (over half of the bases production was impacted) was disrupted. Nymex Crude, BP and Shell were also affected as traders heavily feared for the production of oil over the next few months/years.

Saudi Aramco, the largest firm in the world and owner of the attacked oil bases, was planning on having its IPO in early 2020. Many predicted this latest setback could mean this initial date for going public would be delayed, however Aramco swiftly assured investors that the disruption to productivity will be nullified in a matter of weeks – or even possibly as soon as the end of September.

The oil markets were sent back down on the promising news, but still reside significantly higher than what they were at previously. It bodes well, though, that such a significant crisis can be overcome in such a short space of time – although we’re not completely out of the woods yet.

19 SEP Brent Crude

Find out how all the major oil markets reacted to the crisis.

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JD Sports

JD Sports is under investigation as it completes its takeover of Footasylum. Market Authority and other regulators are opening up queries into the takeover as they are worried that as the industry heads further towards a monopolistic state, consumers will be affected by increase prices and a fall in choice. How come they care about this monopoly but when I’m losing at the board game, facing an opponent owning all the dark blues, greens and yellows they’re nowhere to be seen?

Despite the investigation, JD Sports Fashion PLC continues to rise and shows growth since the beginning of the year.

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FOMC rate cut 'gutless'

Just like when your mum would buy you sweets as a kid but would limit you to only two or three at a time, the Fed gave Trump just a taste of what he wanted but not the full packet. A 25 basis-point cut was not enough to fill the belly of the President, who audaciously urged Jerome Powell to reduce rates to 0% or less. He took to Twitter to berate the ‘gutless’ move.

Wall Street initially fell on the announcement, before picking straight back up. It was at 27052.5 at 19:00 (BST) on Wednesday, before dropping nearly 150 points in half an hour. By 20:45, it was back up to around 27160.0 and at the time of writing is up a further 50 points.

19 SEP Dow

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Big paycheck angers Ryanair investors 

When your firm is in dire straits, there are strikes taking place left right and centre as pilots rebel against poor pay, fares are at an all-time low to compete with a general fall in fare prices across the industry and your reputation is in the gutter, what’s the next move? According to Ryanair it’s announce that your earnings as CEO could hit €100 million.

It’s come out that Michael O’Leary might be able to earn that through stock options depending on performance of the troubled airline, which has struck a chord with a fair few. The firm’s share price had been rallying since mid-August, but strike action has this week set it on the way to drop back down to well below the €10 mark.

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Aldi takeover

Attack when your enemies are at their weakness. Is that not the saying? Aldi are doing just that in their aim to dominate the supermarket industry. Other big playersGlo, such as Asda and Sainsburys, are trying to consolidate what they have and make sure they can be profitable while remaining competitive. Aldi, on the other hand, is going all out with the offensive and risky strategy of opening significantly more (the target is one a week) stores across the UK.

Aldi remains a private company and doesn’t look like it will go public anytime soon, but its quest for a larger market share may prove to have an impact on those supermarkets that are public.

 

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