US BUDGET,CRUDE SALES , GEOPOLITICAL RISK AND INDIAN TAXATION REFORM
US
BUDGET will be passed and it will back by huge spending on that asset class
which were ruled y some other countries historically. This is what Made in
America will mean over the next decade under Mr. Trump. He is clear that he
will eradicate all those countries that were making a living of billion dollars
at the cost of his country. OPEC will have to continue for a lifelong cut down
in prices and I find more pressure to build up as cheap crude from US economy
will enter the markets.
The
federal government has stashed away nearly 700 million barrels of oil out which
50% is being taken by the US President to sell in the near term. This selling
will fetch the US $16.6 billion by 2027 for its Ambitious Budget funding. This
will freeze the spines of many crude producers and will throw out many
competitors out of the market for good. Those who are betting on price hike and
price down I leave the battle to them. These sales will happen since funding
the ambitious budget expenditures will be a key game and
selling crude will help me make this possible. Now it’s a winning proposition
for all those countries who import crude. Congress had already recently
approved selling down some reserves to raise money for various domestic
programs. The administration now wants to increase those sales. Hence this is
easier to do since rising interest rates will put pressure on the Earning and
GDP growth and hence Government based inflow of capital is highly required
which can only be done through sale of this crude reserves. Congress authorized
sales from the stockpile in 1996 to pay for deficit reduction, marking the
first time it tapped the reserve for reasons other than its stated purpose.
Now
war at this point of time will fill up the kitty of the sellers of Crude which
will be other side winning proposition for the crude exporters. Its very
balanced and wait and watch outlook to figure out how the global crude
imbalances will move further and how US will fund its Ambitious Budget.Well the
sellof will not be overnight and it will be done judiciously and only thing to
keep an eye is on Geopolitical tension which leads to huge use of crude which
finally increases the demand.
As I always dig into some hard core analysis I
find that this ambitious crude sales plan have been pushed previously also and
now As MR. Donald belongs from the business community he is now being persuaded.
ExxonMobil, which lobbied for congressional bills in both 2012 and 2015
calling for selling this crude in open market was refused hence now it
has again started the lobby. Exxon, as well as the American
Petroleum Institute (API) and the Independent
Petroleum Association of America (IPAA), have long
lobbied for this resource to be tapped. This will be big event to watch that
how Trump will play his cards.
On
the other hand as a member of the International Energy Agency, the United
States must store enough petroleum to equal at least 90 days of U.S. crude
imports, currently as on last September it held equivalent of 141 days of imports .
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