Saudi tur­moil sends oil mar­ket to two-year high

The Oklahoman (Sunday) - - BUSINESS - Walt & Alex Bre­itinger www.paragon in­vest­ments.com

Ris­ing oil prices lead this week’s edi­tion of Fu­tures File, our weekly com­modi­ties wrap-up.

Saudi shake-up un­nerves oil mar­ket

Saudi Ara­bia was a hot­bed of ac­tiv­ity this week, which spooked the oil mar­ket to a two-year high near $58 per bar­rel.

The Mid­dle East­ern king­dom is un­der­go­ing in­ter­nal tur­moil after the heir to the throne, Crown Prince Mo­hammed bin Sal­man, fired nu­mer­ous gov­ern­ment min­is­ters and de­tained other princes on the premise of anti-cor­rup­tion ef­forts. The moves are be­ing seen by many as a con­sol­i­da­tion of power, as the Crown Prince takes out many of the rul­ing class, some of whom rank among the wealth­i­est in the world.

On top of the in­ter­nal strug­gles, Saudi Ara­bia shot down a mis­sile this week that was fired at its cap­i­tal from neigh­bor­ing Ye­men. U.S. in­tel­li­gence of­fi­cials con­firmed that the mis­sile came from Iran and was fired by pro-Ira­nian Houthi rebels in Ye­men. Saudi Ara­bia has been at war with these rebels for years, but now de­clared that the mis­sile at­tack may be an “act of war” by the Ira­ni­ans.

If war were to break out be­tween two of the Mid­dle East’s ma­jor mil­i­tary powers, and two of the world’s largest oil pro­duc­ers, the im­pact on the global oil mar­ket would be dev­as­tat­ing on a scale not seen since the first Gulf War.

Corn yields reach record

De­spite hot and dry weather this sum­mer, U.S. corn yields hit a record high this year at 175.4 bushels per acre, ac­cord­ing to Thurs­day’s update from the U.S. Depart­ment of Agri­cul­ture.

Crop yields have risen sharply in re­cent years due to crop ge­net­ics, bet­ter pest man­age­ment, im­prov­ing ma­chin­ery, and in­creas­ingly ef­fi­cient farm­ing tech­niques. Ris­ing yields have al­lowed the U.S. to con­tinue pro­vid­ing a sur­plus of grain de­spite a ris­ing global pop­u­la­tion, in­creas­ing live­stock herds (that are largely grain-fed), and the ad­di­tional de­mand from bio­fuel pro­duc­tion.

This year’s har­vest is pro­jected to ex­ceed 14.3 bil­lion bushels, which could leave an ex­cess, or carry-over, of more than 2.3 bil­lion bushels of corn. Fears of over­sup­ply knocked corn to a new low price near $3.40 per bushel, cut­ting deeply into farmer’s prof­itabil­ity for those that waited un­til har­vest to price their grain.

Opin­ions are solely the writ­ers’. Walt and Alex Bre­itinger are com­mod­ity fu­tures bro­kers with Paragon In­vest­ments in Sil­ver Lake, Kansas. They can be reached at (800) 411-3888 or www. parag­o­nin­vest­ments.com. This is not a so­lic­i­ta­tion of any or­der to buy or sell any mar­ket.

[AP FILE PHOTO]

Mus­lim pil­grims walk out­side the Grand Mosque in the holy city of Mecca, Saudi Ara­bia.

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