Milan (AsiaNews) It was a negative day for Asian markets, shaken by the news of an attack that seriously damaged the strategic pipeline feeding into the Faw peninsula oil terminal in Iraq. Negative influences were also brought on by Japanese fears of an increase in US Federal Reserve interest rates and by an announcement made by the Chinese Central Bank of a general freeze on prices.
The pipeline directing crude into the Faw terminal (near Bassora in southern Iraq) is a strategic junction. It from this point on the map that all of Iraqi oil exports have been shipped abroad until now (1.8 million barrels of oil a day). Yet since the beginning of the war, it has been closed for fear of attacks on the line bringing oil from Kirkuk to the Turkish port of Ceyan in the eastern part of the Mediterranean.
Reactions of oil markets were moderate early this morning, also because operators in the sector are trying to understand how relevant the damage has been and whether shipments would start up again soon. All the countries of the Persian Gulf region, including Saudi Arabia, Iran and the United Arab Emirates, have said they are ready to increase their own exports should price levels stay high. Currently, English Brent crude, the world's reference parameter more than any other oil, is being quoted at around 37 dollars a barrel, near its highest level in the last 13 years.
This morning the Tokyo stock exchange fell 5% due to fears of a "credit squeeze", that is, of an increase in interest rates by the US Federal Reserve, the American government monetary authority. However fears for how the Chinese economy is doing have also contributed to the drop in the Japanese stock market.
The Chinese Central Bank, after announcing a few weeks ago the blocking of financing to the country's new infrastructures and industrial plants, has now said it will issue a general freeze on prices. In both cases the move is a politically influenced administrative measure and, thus, a clear sign that Chinese authorities are not equipped with proper tools to run the economy efficiently.
Hence the fear is that the situation may get out of hand. For all Asian countries, the bubble of the Chinese economy has been a cure-all in recent years, saving the region from the harsh effects of the recession that has hit other parts of the world.
A reversal of trends in China would therefore spark a negative downturn, marked by the fact that all of Eastern Asia is heavily lacking in oil and energy supplies.
As a cascade effect, Asian problems could have their influence on American and European financial markets, since much of the world's liquid assets and US Treasury bonds are held by East Asian banks and institutions. A possible return of Asian capital invested in Western markets could have major repercussions on the latter.
