If This Happens in China, Oil Could Soar

There is an actual shooting war in the Middle East right now, but the lack of a retaliation on Iran by Israel has kept oil somewhat rangebound. Lee Jackson and Doug McIntyre discuss whether this means oil prices will stay in this zone, or if a rebounding Chinese economy could cause prices to soar.

Transcript: 

This is Doug McIntyre, the editor-in-chief at 24-7 Wall Street.

And I am with Lee Jackson, who is our senior editor of Investing, the Economy, Finance extraordinaire.

Lee has been with us way over a decade.

So Lee, there is an actual shooting war going on in the Middle East, which, as you know, happens from time to time.

What happens to oil now? There are two theories.

One is there’s enough oil.

The other is there isn’t enough oil.

So how does that work itself out?

You know, it’s kind of interesting.

I saw a piece today with the cow guy, and he’s a pundit that’s often on Fox Business News.

And he said it was kind of interesting that now that the – Iran failure to really inflict any damage on Israel and so far no counterattack of any great magnitude that, you know, oil could just be kind of range bound in this 90 to $95 area for some time, which is, I mean, oil companies love it at this level.

And I’m sure that the Arabs, you know, as a whole OPEC would like it even higher, but it could be range bound.

Well, what’s interesting is that it is U.S. technology that has kept this war from getting worse.

I mean, really, our military may end up saving the world from getting huge amounts of inflation again.

Agreed.

So let’s say that nothing happens.

One thing that has happened is that the Chinese economy is doing better than expected.

They are the largest importer of oil by far.

From Iran.

Yep.

If that economy picks up pretty well and the rest of the world stays where it is, does the demand for oil tick up by a fair amount?

No.

I would think so, yes.

And just because of the sheer size of China, the population and the economy, I think, yeah, pick up in the Chinese economy, which has been stagnant for years.

And again, we never really know exactly what the economy is doing there because it’s the Chinese Communist Party.

But if it does indeed start to track higher, I think oil can go a lot higher.