Oil’s back below $30 and suddenly it feels like 2016 all over again. Only it’s not. Saudi Arabia’s 2015-2016 production boom was a war on US shale. This time, Saudi Arabia is waging a war for market share against Russia and the US. It’s a war with no winners, least of all US fracking.
After taking a hit earlier this summer, oil prices have climbed back around $50 a barrel. What’s my advice on oil price volatility? Hang in there. The good news—we’ve been through this before. The bad news—we’ve been through this before.
In late May, OPEC (Organization of the Petroleum Exporting Countries) and non-OPEC oil producers agreed to extend production cuts through April 2018 in the face of oil inventories that remain well above average. While one would have expected a positive market reaction, many investors believed deeper cuts were necessary and the market has sold off sharply since the meeting.
How might the new administration make good on its promise of a lower corporate tax rate? The House has proposed funding the cut with a new border tax on imports (BAT).