Petrodollar Reflux to Hit Treasuries, Other Assets

Oil-producing countries dump assets to fill budget holes. Executive Report with ISA Intel, Oil & Energy Insider: The collapse in oil prices is draining oil-exporting countries of revenue. With substantially lower oil revenues, many of the world’s sovereign wealth funds are dropping in value, which has ramifications for the assets they are invested in. The IMF took a look at this connection between oil prices and sovereign wealth funds and raised the possibility that asset prices around the world could be negatively impacted.
Oil-Backed Sovereign Wealth Funds Sovereign wealth funds emerged in a big way when oil prices started to rise in the early 2000s. An enormous transfer of wealth occurred from oil-consuming countries to oil-producing countries. Countries like the U. S., for instance, had to shell out ever more cash to buy imported oil from, say, Saudi Arabia.

This post was published at Wolf Street by ISA Intel ‘ November 2, 2015.