/biz/ - Business & Finance

>>844951

The Saudis aren't the root cause. The primary cause of oil's price drop is that consumption (and thus, demand) has dropped. The Saudis are exploiting it to try and kill newer wells by not cutting production. Then you have Iran coming online, so you get a huge glut.

But the base of that glut, again, is that demand is smaller than supply. Thus, the price is lower now.

Low oil isn't good for the US or EU, because it hurts their domestic industries. And it completely fucks over smaller countries that rely on export. Brazil was looking to profit off it's offshore wells, same for Venezuela. Investment there has stopped for the time being because the low price of oil doesn't justify it. Just look at how Russia's doing.

A second global recession is happening because as usual investors overextend themselves and want to cash out. This is a natural part of capitalism, hence why the term business "cycle" exists. When Yellen raises rates later this year, saving money will become a much more attractive option for smaller investors, who right now have nothing to gain from letting money sit where it can't grow (this was the whole purpose of dropping rates, so that people would go out and spend it).