Getting a grip on oil can be quite tricky, especially with the way markets are sliding back and forth with every new report. The latest piece of information to fall is that Russia and Saudi Arabia, two of the world's top oil producing nations, have agreed to join Qatar and Venezuela in placing a freeze on current oil production. While the terms are the arrangement are still in discussion and the possibility of other countries like Iran joining in the effort, this seems to be a step in the right direction. Earlier this year Saudi Aramco, owned by the Saudi government, was exploring the possibility of becoming at least in part a publicly traded company. When this news broke earlier this year amidst the rocky conditions of oil it sent waves through the industry. Depending on what you read there are experts saying the worst is over while others believe the bottom has not yet been reached. One thing is for certain, the speculation on oil is hurting a lot of companies and causing the markets to bounce around like a pinball. Russia and Saudi Arabia are making an effort to stop the sliding oil prices which have been caused largely by oversupply combined with the drastically slowing pace of the Chinese economy resulting in decreased demand. By freezing production now they are aiming to level of the supply until the demand for more oil starts to heat up.The market reactions to oil news is causing controversy as many investors are unsure of what to do with such large market swings. the Dow Jones Industrial Average (DJIA), S&P 500 and NASDAQ were all down from November thru January while oil prices tumbled and big US oil stocks like Exxon Mobil
Ripples from the oil industry are making waves in the global economy as market volatility is leading to unrest while Federal Reserve policy makers are holding off on major decisions due to a strong dollar and the uncertainty of China's economy. Iranian Oil Minister Bijan Zanganeh has said he will support any effort to stabilize the market and the more people on board the better the chances will be. In June of 2014 Brent Crude and West Texas Intermediate (WTI) Crude were trading at over $110 a barrel and increased production with a sharp decrease in demand led to a plummet in price that reached $40 a barrel in 2015. Early this year oil went below $30 a barrel which really set things into a spin. Bloomberg Chief Energy Correspondent Javier Blas suggests that the United States and Iran need to join in on the production freeze in order to "have the kind of muscle that you need to influence the market." What happens next is anybody's guess and it is very possible the latest crude conundrum will spark the debate on alternative fuel sources. If the market stays as closely tied on oil as it has been recently, we could be in for a very long winter.