Tags: DavidMcAlvany | Russia | oil | prices

David McAlvany to Newsmax TV: With Russia in the Mix, Oil Prices Won't Drop

By    |   Monday, 31 March 2014 09:44 PM

It's unclear whether oil prices will soar, but they won't fall, says David McAlvany, CEO of McAlvany Financial Group.

"We expect to see something of a floor, and Russia is certainly clear on wanting a floor in oil prices," he told "America's Forum" on Newsmax TV. "They need a floor in oil prices. So much of their economy is dependent on oil and gas revenues."

Russia needs a price of $100 to $105 a barrel, McAlvany said. West Texas Intermediate contracts expiring in May settled at $101.58 on the Nymex Monday.

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What Russia is looking for in its conquest of Crimea is the guarantee of a warm-water port, he said. That's important if Russia is going to keep selling arms to Iran. "If you continue to sell arms to Iran, you create that conflict between Iran and Saudi Arabia," McAlvany said.

Editor's Note: These 38 Dates Are Key to Bagging $313,038

"You underscore the differences between Saudi Arabia and Iran, and thus you maintain an elevated oil price. So the fiscal picture for Russia is dependent on the ability of Russians to sell arms to Iran."

If the United States works to export natural gas, "that will challenge the monopoly status that Russia has in Europe," McAlvany said.

"As soon as we get LNG [liquefied natural gas] plants and the facilities to export throughout the country, we are then in a position to export not only to Asia but to Europe, and that really does break the monopoly status which groups like Gazprom have in Europe."

As for the West's sanctions against Russia, we have seasonality on our side, because Western Europe has less demand for Russian natural gas in the spring than during the winter, McAlvany said.

"We're coming into a season where there's going to be less natural demand for natural gas, for heating and what not."

To be sure, "the long-term ramifications [of sanctions] are dollar-negative, because what this forces is an Asian and a Russian workaround in terms of the way we settle accounts and transfer money internationally," McAlvany said.

They won't be using the SWIFT (Society for Worldwide Interbank Financial Telecommunication) banking system, he said.

 "So you're going to see a dramatic acceleration away from the U.S. dollar and a dramatic acceleration away from the backbone of what is our financial system in the West," McAlvany said.

When it comes to the China's currency, "we're already seeing an aggressive move toward the regional dominance of the yuan in the Asian space," when it comes to trade, McAlvany said.

However, "they are not yet at a point where they can challenge the dollar in terms of reserve currency status. But that could come on the heels of this."

Editor's Note: These 38 Dates Are Key to Bagging $313,038

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It's unclear whether oil prices will soar, but they won't fall, says David McAlvany, CEO of McAlvany Financial Group, told "America's Forum" on Newsmax TV.
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2014-44-31
Monday, 31 March 2014 09:44 PM
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