Tracking global market movements ahead of U.S.-China trade deal signing

As the world ushers in the new year, geopolitical tensions have already taken center stage, impacting the global oil market. The recent escalation between Iran and the United States caused crude oil prices to spike to nearly $69 a barrel. However, with the de-escalation of the crisis, prices have now settled around $65 a barrel. Looking ahead, the focus shifts to Saudi Aramco's pricing strategy and production levels, which will be crucial in maintaining stability in oil prices. The signing of the U.S.-China trade deal is eagerly awaited as it could significantly impact global oil demand and prices. Kola Karim, Chairman of Shoreline Group, shared insights on the geopolitical landscape and its effect on the oil market. Karim emphasized the importance of the U.S.-China trade relationship in driving global oil demand. The trade tensions between the two economic giants had a significant impact on oil prices last year. A resolution in the trade dispute could potentially reignite manufacturing activities in China and boost oil demand. The signing of the preliminary trade deal is seen as a critical step towards stability in the global market and could lead to an uptick in industrial growth. When discussing OPEC and its allies, Karim predicted a cautious approach in the form of minor production cuts to stabilize the market. However, he acknowledged the challenge posed by rising American shale production, which could offset OPEC's efforts. The key to driving oil demand lies in global economic prosperity, particularly in major economies like China and India. Karim highlighted the positive impact of growing economies on oil demand and global economic growth. Karim also touched upon Nigeria's role in the oil market, noting the country's potential to increase local production with the upcoming commissioning of the Dangote refinery. This development presents an opportunity for Nigeria to focus on meeting domestic demand while continuing to expand its export market. Maintaining price stability is crucial for Nigeria and other oil-producing nations to support global market growth. In terms of projections for 2020, Karim suggested that $60 per barrel could be the average price for the year. However, he emphasized that any price spikes would likely be temporary without resolution in key trade deals. The stability in pricing hinged on resolving trade disputes between the United States and major trading partners like China and Mexico. Overall, the outlook for the global oil market in 2020 remains contingent on geopolitical developments and trade agreements that will influence oil demand and prices.