Oil after Assad's fall

Investment Analysis Clubs Macro Economic Trends and Risks
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Syria doesn’t produce much oil. The markets have instead focused on the tepid growth of global demand that can probably be met by new supplies from the United States, Brazil, Canada and other producers not bound by the agreements of the OPEC Plus cartel.

https://www.nytimes.com/2024/12/09/business/oil-prices-syria.html

https://stockcharts.com/sc3/ui/?s=%24XOI

So far, the markets have shrugged off the revolution in Syria over the weekend. It’s not likely the markets will be impacted in the future if they didn’t react today.

As for the Syrians, there’s a strong probability that they will end up worse off, not better. Just think of Iraq after Saddam Hussein was toppled.

https://www.nytimes.com/2024/12/09/opinion/assad-syria-whats-next.html

Assad’s Syria Was Brutal. Will What Comes Next Be Better?

By Daniel Byman, The New York Times, Dec. 9, 2024

…
If chaos, revenge, and infighting consume parts of Syria, the humanitarian situation may get worse, not better. … [end quote]

Thomas Friedman (who is a really smart analyst) wrote:

https://www.nytimes.com/2024/12/08/opinion/friedman-syria-iran-future.html

My biggest worry expressed in a single headline: That goes to Haaretz in Israel: “Post-Assad Syria Is in Danger of Being Run by Out-of-control Militias.” We are at a moment in the history of the Middle East where there are many countries that I would describe as “too late for imperialism, but they failed at self-government.” I am talking about Libya, Yemen, Lebanon, Syria, Iraq, Somalia and Sudan. That is, no foreign power is going to come in and stabilize them, but they have failed at being able to manage their own pluralism and forge social contracts to create stability and growth. We have never been here before in the post-World War II era — a moment when so many countries have descended into this Hobbesian state of nature, but in a much more connected world.

This is why, having just spent the past week in Beijing and Shanghai, I repeatedly told my Chinese interlocutors: “You think we are enemies. You are wrong. We have a common enemy: Disorder. How we collaborate to shrink the World of Disorder and grow The World of Order is what history will judge us both for.” [end quote]

Such disorder will probably affect the Macro economy only marginally, as in the re-routing of oil tankers to avoid Houthi rebels in Yemen. But a lot of people will suffer. And the expansion of markets into previously poor countries, upgrading their lifestyles to middle class, may reverse.
Wendy

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Methinks Syria will be a rerun on what has occurred in Libya. Squabbling rebel factions over control. A breeding ground for fundamentalist Islamic terrorists.

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The difference in Libya’s case, is there is a repressive dictatorship between it and Israel.

Steve

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Ripple effects…

Syrian Asylum Applications Stopped by European Countries
https://www.msn.com/en-us/news/world/syria-asylum-applications-stopped-by-european-countries/ar-AA1vxWCe?ocid=BingNewsSerp
European countries are suspending asylum applications from Syrian citizens following the capture of Damascus by rebels…

Sweden, Germany and Austria have suspended asylum applications due to the uncertainty surrounding political developments…Denmark and Norway also suspended Syrian asylum applications. France is set to suspend asylum applications, with the government working to halt current cases following the fall of Assad.

DB2
About 5% of all Syrians live in Germany

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So…because the recognized government is gone, and the country is under the control of a grab-bag of terrorist groups, people are no longer in danger in Syria, so no longer need asylum?

I have difficulty following that logic.

Steve

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It could be just the opposite. Maybe it is fundamentalist Islam that breeds failed nations.

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iirc, neither Assad, nor Hussain were fundy whacks. Iran, under the Shah, practiced western dress. I noticed, on the news, last night, some women walking around in Damascus were bare headed. Today, all but one were wearing a hajib. The one that was bare headed was telling the BBC reporter how she didn’t believe the new bunch would enforce strict Islamic law…but I have noticed all of the new crowd’s soldiers have beards.

Another tidbit reported by BBC: the bunch that took Damascus has been supplied and trained by Turkey.

Steve

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That is correct. Neither Assad, nor Hussein, nor the Shah were working to a goal of their nation failing. It was the fundamentalist Islamic folks that did it and continue working on it.

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I look at what’s happening here and wonder if fundamentalist Christians are all that different.

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Beliefs don’t really matter. Actions do!

The Captain

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A few weeks ago, J.P. Morgan had suggested oil prices would decline when Trump took over. China’s demand has already dipped.
https://seekingalpha.com/news/4323802-jp-morgan-forecasts-lower-oil-prices-in-trumps-upcoming-term

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Is there a connection?

DB2

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Good question.
J.P. Morgan can offer some arguments as to why Trump policies could create downward pressure on oil prices. But, I don’t see them quite explaining China’s demand drop as easily. Less activity in the construction/housing market? Or, could it be that China is feeling the effects of the additional refinery additions elsewhere - Middle East, Nigeria (Dangote)?

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Recession always causes a drop in oil demand :wink:

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A brain drain would destroy the birth of the Syrian state.

The other way of seeing this is as Russia’s Syria versus the American’s Iran 1979.

The Syrians want to deal with us. So do the Georgians, so too Ukrainians.

If you need to blame us find more fertile grounds.

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There may be a shift on immigration going on, but I suspect there are also practical reasons. Who is seeking asylum from whom? Also, the chaos provides good opportunities for terrorists to “seek asylum” in Germany.

DB2

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Makes sense. The basis for most asylum claims is persecution by the ruling government. The formerly ruling government is gone. Some of the asylees will no longer be facing political persecution at home; and if others continue to face the risk of persecution at home, the facts will certainly be different.

It remains to be seen whether this slows or reduces the flow of Syrian refugees. If Syria descends into failed state/warlord state status, it might even increase. You may just see different groups being persecuted. No longer the political victims of the al-Assad regime, but perhaps Alawites fleeing retribution…or Kurds facing a crackdown at the behest of the rebel alliance’s Turkish allies.

The situation is still, as they say, very fluid.

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But who would take in those millions? I doubt Germany would go for a repeat of the ‘million man march’.

DB2

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Seems that is about where it is now. The media is atwitter about one group, but I don’t hear a word about what is going on elsewhere. Turkey has a lot of Syrian refugees that it would like to get rid of. Turkey also has a bone to pick with the Kurds. And the one group the media is nattering about is supported by Turkey. What are the chances Trukey decides to launch a “peace keeping” mission in Syria? That is another problem for Israel, as it’s relations with Turkey have turned sharply south recently.

Steve

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I don’t know - and I don’t know if it will be millions. The elimination of the al-Assad government might end up reducing the flow of refugees, perhaps even reversing it. And even if there are still large numbers of people fleeing Syria, they may not get asylum in the EU.