Marketplace is community-funded public service journalism. Give in any amount that works for you – what matters is that you give today.
Doug Krizner: The price of crude oil is approaching $88 the barrel this morning. These are record high levels. Several factors are at work. The first is concern Turkey may attack Kurdish militants in Iraq.
Let’s bring in Javier Blas of the Financial Times. Javier, what are you hearing this morning?
Javier Blas: Something that oil traders are telling me is when you have a military operation in the Middle East, you know how the operation is start, but you never know how it’s gonna end.
Krizner: How much of this rise in oil is due to weakness in the dollar? Because crude oil futures are traded in U.S. dollars.
Blas: Of course, OPEC countries has an incentive, an extra incentive to keep oil prices higher when they suffer from weak dollar. For most of the Gulf producing countries, the European Union is now the main trading partner. So they have revenues on a weakening U.S. dollar, and at the same time, their expenses are, the imports are in a currency that is stronger by the days.
Krizner: Is there a price at which the OPEC ministers would become concerned — a price that would be too high, that would begin to negatively impact demand?
Blas: I think some of the oil ministers are already concerned about the current levels triggering inflation at a moment where the U.S. Federal Reserve probably will need to cut interest rates to prop up the U.S. economy.
Krizner: Javier Blas covers commodities for the Financial Times in London. Javier, thanks so much for speaking with us.
Blas: Thank you.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.