Oil prices have suddenly fallen today in a bart like shape familiar to many bitcoin traders following an intervention by President Donald Trump who said:
Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike – fragile!
— Donald J. Trump (@realDonaldTrump) February 25, 2019
After oil prices rose for much of this year from $50 to a recent high of $67, there was a price fall just now with futures down 2%.
OPEC member Saudi Arabia has been cutting oil production from 11.1 million barrels in November, to 10.2 million bpd.
Saudi Energy Minister Khalid al-Falih said they will cut even further, lowering it to 9.8 million bpd next month.
Russia, likewise, and many other OPEC members, have been cutting production to create a floor on oil prices following a significant increase in oil production within America and an increase in US oil exports.
That can cause problems for oil economy countries which use the liquid gold to fund government services.
The cartel thus ignored Trump’s calls in December to not cut production with OPEC to meet again in seven weeks.
Another upwards pressure on price has been US sanctions on Venezuelan oil, while clashes over oil fields continue in Libya.
A fall in oil prices has a stimulus effect on the economy as it amounts to a tax cut, while an increase in fuel duty in France sparked the yellow vests protests.
Much of the west, therefore, would like prices to be as low as possible, but oil economy countries are deeply reliant on its export, with falls in oil prices at times leading to monetary instability and potentially even a complete collapse as arguably happened in Venezuela beginning in 2014 following a significant increase in oil supply by Saudi Arabia.
There’s thus been tension between oil reliant countries and much of the rest since at least the 70s with the OPEC group a powerful alliance.
All of this obviously doesn’t have a direct effect on crypto prices, but this space isn’t an isolated island. As a high risk product, you’d think if the economy is doing well then cryptos are likely to do better than otherwise as individuals would have more savings and thus more need for diversification.
The tweet also indicates Trump is now turning his focus on the economy which may well contain aspects related to cryptos, blockchain tech, or perhaps SEC reforms, ahead of what might be a very close 2020 election.