Exclusive to Al Watan Daily
Tuesday,01 March 2011
By : Kamel Al-Harami
KUWAIT: Seriously can we stop some major international financial houses from driving oil prices up? Can we stop them from using their speculation tools in pushing oil prices higher and creating chaos in oil markets? Can we prevent them from making profits by forecasting a high oil price only to be called the first firm to forecast the figure once the price of oil registers at 220 US dollars a barrel? Can we simply stop financial institutions like Nomura by calling its bluff that oil prices will hit the magic figure of $220 a barrel?
Firstly, who has given Nomura the right to state that oil prices will reach $220 a barrel based on its own new speculative exaggerated assumptions and methods? Secondly, why don't oil consuming governments question the basis for such unrealized assumptions? Is it not time for consumers' provocative agencies to question oil speculators for presenting the wrong figures to the markets and the consumers? Or to question their motivations and timing for raising and pushing oil prices to more than $119 a barrel in less than 48 hours? Or to question their financial gains as direct results for their price-guessing?
Oil consuming countries along with consumer agencies must make stand against trading speculators who are leading the world into another financial crisis at a time when it is slowly recovering from the impact of oil priced at $147 a barrel. We are aware of political crisis in some major oil producing countries such as Libya, which shut down most of its production capacity, still, however it did not mean that other oil producing countries cannot replace the lost capacity. Particularly at a time when demand for oil was going to be reduced by more than two million barrels a day, that the Organization of Petroleum Exporting Countries (OPEC) has enough spare capacity to face any immediate shortage over three million barrels, and that the seasonality in the oil markets and in particular the end of high demand period by the end of the month. Such essential markets were not taken into Nomura's calculations but they focused on the worst case scenario in serving their own selfish objective, while ignoring all other positive elements of adequate supply in oil consuming and producing countries. Why didn't oil companies try to sue them?
The other method that Nomura used for its speculations is by using the Algerian political situations to justify its main objective of reaching the $220 a barrel benchmark, and through that it had sparked the movement of oil prices to jump beyond $110 a barrel in less than 48 hours.
Nobody can prevent speculators from speaking their minds but we are talking about reputable financial institutions that should be more objective in their speculations rather than driving the global financial markets to panic and chaos. Knowing the current fragile economic situations and their impact on future growth, the role of reputable financial institutions should not include taking advantage of situations to their benefits and temporary gains. They must be more even-handed in their assessments and not let selfish gains be the key determined factor.
For this reason new legislation must be produced to put an end to false financial speculation and we must work together to hold those financial houses accountable. Nomura must give clear answers to their intentions as to why they are attempting to push oil prices to the $220 level, and how much money it gained from spreading such rumors around the financial markets. Isn't time to act and face the speculators?
The author of this article can be reached at naftikuwaiti@yahoo.com
Disclaimer: Please note that the views and opinions presented in the column are the company's own and do not necessarily represent those of Al Watan Daily and its staff.
Tuesday,01 March 2011
By : Kamel Al-Harami
KUWAIT: Seriously can we stop some major international financial houses from driving oil prices up? Can we stop them from using their speculation tools in pushing oil prices higher and creating chaos in oil markets? Can we prevent them from making profits by forecasting a high oil price only to be called the first firm to forecast the figure once the price of oil registers at 220 US dollars a barrel? Can we simply stop financial institutions like Nomura by calling its bluff that oil prices will hit the magic figure of $220 a barrel?
Firstly, who has given Nomura the right to state that oil prices will reach $220 a barrel based on its own new speculative exaggerated assumptions and methods? Secondly, why don't oil consuming governments question the basis for such unrealized assumptions? Is it not time for consumers' provocative agencies to question oil speculators for presenting the wrong figures to the markets and the consumers? Or to question their motivations and timing for raising and pushing oil prices to more than $119 a barrel in less than 48 hours? Or to question their financial gains as direct results for their price-guessing?
Oil consuming countries along with consumer agencies must make stand against trading speculators who are leading the world into another financial crisis at a time when it is slowly recovering from the impact of oil priced at $147 a barrel. We are aware of political crisis in some major oil producing countries such as Libya, which shut down most of its production capacity, still, however it did not mean that other oil producing countries cannot replace the lost capacity. Particularly at a time when demand for oil was going to be reduced by more than two million barrels a day, that the Organization of Petroleum Exporting Countries (OPEC) has enough spare capacity to face any immediate shortage over three million barrels, and that the seasonality in the oil markets and in particular the end of high demand period by the end of the month. Such essential markets were not taken into Nomura's calculations but they focused on the worst case scenario in serving their own selfish objective, while ignoring all other positive elements of adequate supply in oil consuming and producing countries. Why didn't oil companies try to sue them?
The other method that Nomura used for its speculations is by using the Algerian political situations to justify its main objective of reaching the $220 a barrel benchmark, and through that it had sparked the movement of oil prices to jump beyond $110 a barrel in less than 48 hours.
Nobody can prevent speculators from speaking their minds but we are talking about reputable financial institutions that should be more objective in their speculations rather than driving the global financial markets to panic and chaos. Knowing the current fragile economic situations and their impact on future growth, the role of reputable financial institutions should not include taking advantage of situations to their benefits and temporary gains. They must be more even-handed in their assessments and not let selfish gains be the key determined factor.
For this reason new legislation must be produced to put an end to false financial speculation and we must work together to hold those financial houses accountable. Nomura must give clear answers to their intentions as to why they are attempting to push oil prices to the $220 level, and how much money it gained from spreading such rumors around the financial markets. Isn't time to act and face the speculators?
The author of this article can be reached at naftikuwaiti@yahoo.com
Disclaimer: Please note that the views and opinions presented in the column are the company's own and do not necessarily represent those of Al Watan Daily and its staff.
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