Tectonic shifts are under way in the global economy. But although such changes often have more profound long-term consequences than the short-term factors that steal the headlines, their effects are more difficult to predict.
The oil market reacted in textbook fashion last week to the decision by China’s central bank to allow the yuan to depreciate against the dollar – an attempt to boost China’s cooling economy. North Sea Brent crude – a benchmark for international oil prices – slid to below $50 per barrel after the yuan’s devaluation (see Oil Market Outlook August 2015). International oil and gas is typically priced in dollars, making it more expensive to buy these commodities in local currencies.
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