Microeconomics: IB Economics
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May 11, 8:20 AM
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British Steel nationalisation plans announced by Starmer

British Steel nationalisation plans announced by Starmer | Microeconomics: IB Economics | Scoop.it
From www.bbc.co.uk - May 11, 5:44 AM
The steelworks has been under government control for almost a year, but leglistation to nationalise it will be put forward this week.
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Graham Watson's insight:

As trailed earlier, the Prime Minister has announced the renationalisation of British Steel, safeguarding 2,700 jobs.

 

However, is it good economics? Certainly the figures from the National Audit Office are eye-opening, "the current government supervision regime had cost some £377m", and could cost up to £1.5bn by 2028. Equally, even though the unions are pleased, is it appropriate " that all government-funded projects use UK steel." 

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Microeconomics: IB Economics
Economy
A brief overview of relevant articles for IB, A-Level and Pre-U economists relating to microeconomic issues
Curated by Graham Watson
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Today, 2:00 AM
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Oil price predicted to remain above $100 for rest of year

Oil price predicted to remain above $100 for rest of year | Microeconomics: IB Economics | Scoop.it
From www.bbc.co.uk - May 10, 8:08 PM
Investment bank JP Morgan expects oil to remain in the "low $100s" even if the Strait of Hormuz were to reopen next month.
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Graham Watson's insight:

The usual: D&S, oil prices and geopolitics, with JP Morgan forecasting that oil price is going to remain above $100 for the rest of the year. Oh dear! Economically, this is bad news. Oh dear squared, poor President Trump in the mid-term elections. 

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May 11, 9:15 AM
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E.ON agrees to buy Ovo in deal to create UK’s biggest energy supplier | E.ON | The Guardian

E.ON agrees to buy Ovo in deal to create UK’s biggest energy supplier | E.ON | The Guardian | Microeconomics: IB Economics | Scoop.it
From www.theguardian.com - May 11, 8:28 AM
Acquisition would result in combined company serving about 9.6 million households if given regulatory approval
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Graham Watson's insight:

German energy giant E.ON has announced its intention to buy UK rival, Ovo, creating the largest electricity and gas supplier in the country with 9.6m customers. However, the deal still requires regulatory approval. 

 

As is always the case, E.ON argue that consolidation will be a good thing - with economies of scale being generated such that energy bills are likely to fall. Ovo has also sold on its home services business that provides boiler insurance and servicing. 

 

However, I suspect the real reason for the merger is more to do with the financial uncertainty surrounding Ovo, which has struggled since taking over SSE in 2019, and it failed financial stress test last September. You would imagine that this has allowed E.ON to drive a pretty hard bargain as far as the cost of the merger is concerned. 

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May 11, 3:22 AM
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Full nationalisation of British Steel expected in king’s speech | British Steel | The Guardian

Full nationalisation of British Steel expected in king’s speech | British Steel | The Guardian | Microeconomics: IB Economics | Scoop.it
From www.theguardian.com - May 10, 12:45 PM
Officials reportedly drafting legislation likely to safeguard Britain’s last blast furnaces and save thousands of jobs
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Graham Watson's insight:

Given the history of British Steel, I can't help feeling that they've got this headline wrong: it's renationalisation, rather than nationalisation, surely. 

 

Either way, British Steel is being taken into public ownership and this offers an opportunity to think about arguments for public ownership and arguments for privatisation, and perhaps consideration of whether the 1980s wave of privatisations has been a success; it varies from sector to sector in my view. You might also think about what else has been renationalised, and the arguments offered for renationalisation  

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May 10, 2:25 AM
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‘A long road ahead’: could community car-sharing help UK hit climate targets? | Travel and transport | The Guardian

‘A long road ahead’: could community car-sharing help UK hit climate targets? | Travel and transport | The Guardian | Microeconomics: IB Economics | Scoop.it
From www.theguardian.com - May 10, 2:00 AM
East Midlands electric car club helps residents and cuts emissions – but the need for a volunteer-led scheme reflects a much wider problem
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Graham Watson's insight:

This article starts small, looking at a community car club in Leicestershire, which charges a monthly fee for access to two electric vehicles that can be hired by the day or hour, and even comes with volunteer drivers for those people no longer able to drive, but broadens out to consider the implications of current transport policy for carbon emissions.

 

Despite the current target for all new car sales to be electric by 2035, this seems to be unlikely to be achieved, and decades of under-investment in public transport suggest that we're not going to reduce carbon emissions in the sector in line with targets. 

 

The solutions revolve around reducing car use, and encouraging the faster take-up of electric vehicles, both for individual households and via shared car schemes to plug the gaps where there are no viable public transport alternatives. 

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May 8, 3:30 PM
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Great Western Railway to be renationalised by end of 2026

Great Western Railway to be renationalised by end of 2026 | Microeconomics: IB Economics | Scoop.it
From www.bbc.co.uk - May 8, 12:14 PM
GWR, which runs trains between London and South Wales, will come under government control.
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Graham Watson's insight:

And still they come, with the news that another rail operator - or train operating company (TOC) - is being taken back into state control, with Great Western Railways becoming part of the broader Great British Railways in December this year. 

 

It's interesting to think about privatization more broadly in this context. Has it worked? In which sectors? And why might that have been the case? 

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May 7, 3:18 AM
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'We had people come just to see it': Amazon delivers its first UK parcels by drone

'We had people come just to see it': Amazon delivers its first UK parcels by drone | Microeconomics: IB Economics | Scoop.it
From www.bbc.co.uk - May 6, 7:02 PM
The unmanned aircraft can drop off 100 parcels a day within a 12km radius of Amazon's hub.
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Graham Watson's insight:

Innovation in Darlington of all places. Amazon are trialling the use of drones in the North East. Is this the future? 

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May 6, 9:43 AM
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Airlines cut 13,000 flights in May as jet fuel prices soar

Airlines cut 13,000 flights in May as jet fuel prices soar | Microeconomics: IB Economics | Scoop.it
From www.bbc.co.uk - May 6, 4:09 AM
Airlines have removed nearly two million seats from flights over the month, data from Cirium shows.
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Graham Watson's insight:

Evidence of the global aviation market reacting to the possibility of shortages of aviation fuel with airlines removing nearly 2 million seats from sale in May. However large that may sound, it only represents around 1% of the total capacity in the market and hasn't as yet seen many UK-based flights cut. The majority seats have been shed at Istanbul and Munich and reflect the fact that these airports are increasingly known as 'hubs' for other routes.

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May 4, 6:51 AM
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Trump may not be a fan of clean energy but Iran war is accelerating global shift from oil and gas | Heather Stewart | The Guardian

Trump may not be a fan of clean energy but Iran war is accelerating global shift from oil and gas | Heather Stewart | The Guardian | Microeconomics: IB Economics | Scoop.it
From www.theguardian.com - May 3, 6:17 AM
Unintended consequence of US president’s actions will be boon for China, the leading renewables manufacturer
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Graham Watson's insight:

The law of unintended consequences in full effect here - has the war in Iran inadvertently shifted energy demand away from fossil fuels in favour of renewables. It would be ironic. 

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May 4, 6:18 AM
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Amsterdam bans public adverts for meat and fossil fuels

Amsterdam bans public adverts for meat and fossil fuels | Microeconomics: IB Economics | Scoop.it
From www.bbc.co.uk - May 3, 7:07 PM
Local politicians say the move is in line with the Dutch capital's environmental targets.
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Graham Watson's insight:

I know what Christopher Snowden will make of this - the public health lobby gone mad, an infringement of people's rights and freedom to choose and just another example of 'bad economics' because the impact of the measures will be negligible, and is could well be an instance of government failure. 

 

However, given the resource intensity of producing meat, does it make sense to frame meat consumption as a climate change issue as much as a dietary issue? And what about the fact that the ban doesn't apply to the digital world? So, is it largely an exercise in virtue signalling? 

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May 2, 2:19 AM
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No evidence of widespread fuel price-gouging, says watchdog

No evidence of widespread fuel price-gouging, says watchdog | Microeconomics: IB Economics | Scoop.it
From www.bbc.co.uk - May 1, 6:50 AM
Profit margins were "broadly unchanged" between February and March, the UK's competition watchdog says.
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Graham Watson's insight:

The Competition and Markets Authority (CMA) have reported that there's no evidence of petrol retailers having engaged in price gouging since the start of the Iran war, although they are going to look more closely at a couple of instances where profit margins increased above the norm.

 

However, motoring groups aren't overly impressed by this: they argue that whilst there might not be price gouging, 'rocket and feather' pricing is still occurring and this acts against consumer interests. 

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April 29, 10:34 AM
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UK refineries asked to maximise jet fuel production amid supply fears | Airline industry | The Guardian

UK refineries asked to maximise jet fuel production amid supply fears | Airline industry | The Guardian | Microeconomics: IB Economics | Scoop.it
From www.theguardian.com - April 29, 9:05 AM
Government request follows contingency planning to stop planes being grounded if Iran war supply shocks continue
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Graham Watson's insight:

The government are clearly worries about the implications of an extended closure of the Strait of Hormuz for aviation fuel and have asked the UK's remaining four refineries to maximise the supply of jet fuel. 

 

Aviation fuel shipments are currently half their normal level at the moment, and even though the UK has strategic reserves, there's a sense that the government needs to get ahead of the possibility of an aviation fuel shortage. 

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April 29, 4:30 AM
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No 10 dismisses Reeves’s reported plan for freeze on private rents | Rachel Reeves | The Guardian

No 10 dismisses Reeves’s reported plan for freeze on private rents | Rachel Reeves | The Guardian | Microeconomics: IB Economics | Scoop.it
From www.theguardian.com - April 28, 2:47 PM
Downing Street says focus will remain on cutting bills, backing renters and lowering energy prices
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Graham Watson's insight:

The government have denied that they are going to be imposing a rent ceiling on private rents as part of the strategy to tackle the cost of living crisis. However, just because they're not going to do it, it doesn't mean that you shouldn't be reviewing how you'd go about modelling a rent ceiling on a D&S diagram, or evaluating its impact. 

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April 26, 6:07 AM
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New global panel aims to accelerate move away from fossil fuels | Climate crisis | The Guardian

New global panel aims to accelerate move away from fossil fuels | Climate crisis | The Guardian | Microeconomics: IB Economics | Scoop.it
From www.theguardian.com - April 24, 8:30 PM
Scientists and economists will help countries develop plans to reduce dependence on oil, gas and coal
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Graham Watson's insight:

A number of countries are meeting in Colombia to discuss the green transition, and there's been agreement on the need to form a panel of experts to guide the green transition. 

 

A worthwhile development or more hot air? Can you see what I've done there...

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May 11, 1:40 PM
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British Steel: more questions than answers on the future | Nils Pratley | The Guardian

British Steel: more questions than answers on the future | Nils Pratley | The Guardian | Microeconomics: IB Economics | Scoop.it
From www.theguardian.com - May 11, 12:41 PM
Hard decisions over a possible sale and future subsidies loom now full nationalisation is on the cards
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Graham Watson's insight:

Nils Pratley with analysis of what people are still insisting on calling the nationalisation of British Steel; I'm still adamant it's the renationalisation but assume that because it now only refers to one part of the UK steel industry, this is why the term 'nationalisation' has been chosen.

 

Linguistic quibbles aside, the article highlights why the move is fraught with difficulty, not least because the opportunity cost of the intervention is going to be so high. Ultimately, I suspect the government is hoping to transition the plant to both greener electric arc furnaces and, at some point, back into private ownership. If it's unable to do this, then it will be on the hook for a pretty large sum going forward. 

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May 11, 8:20 AM
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British Steel nationalisation plans announced by Starmer

British Steel nationalisation plans announced by Starmer | Microeconomics: IB Economics | Scoop.it
From www.bbc.co.uk - May 11, 5:44 AM
The steelworks has been under government control for almost a year, but leglistation to nationalise it will be put forward this week.
Read more
Graham Watson's insight:

As trailed earlier, the Prime Minister has announced the renationalisation of British Steel, safeguarding 2,700 jobs.

 

However, is it good economics? Certainly the figures from the National Audit Office are eye-opening, "the current government supervision regime had cost some £377m", and could cost up to £1.5bn by 2028. Equally, even though the unions are pleased, is it appropriate " that all government-funded projects use UK steel." 

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May 10, 11:13 AM
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From fringe issue to the heart of politics: the UK Living Wage campaign marks 25 years of success | Heather Stewart | The Guardian

From fringe issue to the heart of politics: the UK Living Wage campaign marks 25 years of success | Heather Stewart | The Guardian | Microeconomics: IB Economics | Scoop.it
From www.theguardian.com - May 10, 6:08 AM
The group’s latest triumph won over the Department for Business and Trade, now it is eyeing private care providers and supermarkets
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Graham Watson's insight:

Heather Stewart writes about the 25th anniversary of the National Living Wage campaign, differentiating between its voluntary nature and the government-mandated National Minimum Wage (NMW) which impels firms to pay a statutory minimum wage to their employees, albeit the case that George Osborne renamed the later the National Living Wage in 2015, in announcing that the aim of the policy was to ensure that this reached two-thirds of the UK median wage. 

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May 10, 2:18 AM
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Google developers significantly misstate carbon emissions of proposed UK datacentres | Google | The Guardian

Google developers significantly misstate carbon emissions of proposed UK datacentres | Google | The Guardian | Microeconomics: IB Economics | Scoop.it
From www.theguardian.com - May 9, 12:00 PM
Emissions understated by factor of five in Essex plans for tech giant, while Greystoke’s Lincolnshire plans show similar error
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Graham Watson's insight:

Irrespective of the veracity of the figures, it seems remarkable that data centres should be emitting as much carbon as a mid-sized city, such as Bristol. However, according to non-profit, Foxglove, that seems to be the case for three proposed data centres, in Essex and Lincolnshire respectively. 

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May 8, 3:28 AM
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From oil giants to banks: The companies making billions from the Iran war

From oil giants to banks: The companies making billions from the Iran war | Microeconomics: IB Economics | Scoop.it
From www.bbc.co.uk - May 8, 1:00 AM
Through surging profits or soaring share prices, the war has been a boon for some firms.
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Graham Watson's insight:

A nice little primer on which sectors of industry are benefitting from the Iran war - you should be able to guess all of them. However, it's interesting in all sorts of ways: does it justify a windfall tax? And what about executive pay? some of these CEOs are going to be well remunerated on the basis of factors entirely beyond their control. 

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May 6, 9:47 AM
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Airlines among companies using fuel surcharges to cover surge in costs, UK survey shows | Inflation | The Guardian

Airlines among companies using fuel surcharges to cover surge in costs, UK survey shows | Inflation | The Guardian | Microeconomics: IB Economics | Scoop.it
From www.theguardian.com - May 6, 8:33 AM
Firms raising prices at fastest rate in three years, driven by soaring energy and wage bills but also extra materials costs
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Graham Watson's insight:

And the companies themselves are using fuel surcharges to meet rising fuel costs, given that they are profit maximizers. I'm slightly surprised by this; it strikes me that the airlines seem to be able to pass on a good proportion of the risk in the sector onto their customers. Surely that's an essential part of running a business? 

 

I'm not aware of them ever discounting seats if fuel prices have fallen; it will be interesting to see what happens to their profits this year. 

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May 5, 5:27 AM
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Robots move in as waste firms struggle to find staff

Robots move in as waste firms struggle to find staff | Microeconomics: IB Economics | Scoop.it
From www.bbc.co.uk - May 4, 7:43 PM
Humanoid robots are being added to the automation of waste sorting.
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Graham Watson's insight:

A snapshot of the effects of automation in a sector where you would have thought labour costs would already be low. However, it seems that humanoid robots and AI are combining to make waste sorting increasingly automated. 

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May 4, 6:24 AM
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UK airlines to be allowed to cancel flights in advance over fuel shortages

UK airlines to be allowed to cancel flights in advance over fuel shortages | Microeconomics: IB Economics | Scoop.it
From www.bbc.co.uk - May 2, 5:35 PM
Ministers hope move would help avoid last-minute flight cancellations for passengers this summer over Middle East fuel supplies.
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Graham Watson's insight:

The government has brought in a temporary suspension of aviation regulations governing flight cancellations. It is to allow airlines to cancel flights in advance to consolidate passenger traffic on business routes so as to prioritise leisure travel over the summer. It hints at the very real possibility of aviation fuel shortages in the months ahead, something that's only going to increase the cost of flights. 

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May 2, 2:26 AM
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‘Temu Range Rover’: what the bestselling Jaecoo 7 says about China’s electric car ascendancy | Automotive industry | The Guardian

‘Temu Range Rover’: what the bestselling Jaecoo 7 says about China’s electric car ascendancy | Automotive industry | The Guardian | Microeconomics: IB Economics | Scoop.it
From www.theguardian.com - May 1, 10:00 AM
Loaded with extras and produced at a cut price, the crossover SUV has overtaken rival cars from US, Japanese and Korean firms
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Graham Watson's insight:

This article highlights why the Jaecoo 7 has become the best-selling car in its class in the UK, unseating established rivals and selling at a very competitive price as a result of being able to generate significant economies of scale. 

 

It gives a flavour of the changing nature of the car market, and the reasons why Chinese manufacturers are developing a competitive advantage. 

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April 29, 3:14 PM
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The Guardian view on the UAE quitting Opec: whatever importers pay, the price of fossil fuels is too high | Editorial | The Guardian

The Guardian view on the UAE quitting Opec: whatever importers pay, the price of fossil fuels is too high | Editorial | The Guardian | Microeconomics: IB Economics | Scoop.it
From www.theguardian.com - April 29, 2:00 PM
Editorial: The world must accelerate the shift to renewables, regardless of the economic effects of Abu Dhabi’s decision
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Graham Watson's insight:

This Guardian editorial argues that the decision of the UAE to leave OPEC might well see lower oil prices, but irrespective of this, it should be taken not as an incentive to consume more fossil fuels, but to consume less because of the social costs, and negative externalities, associated with their consumption. 

 

They argue that the adverse impact, in accelerating climate change far outweighs the benefits of any growth generated by fossil fuel consumption. 

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April 29, 10:30 AM
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Oil price jumps to $115 after reports of 'extended' Iran blockade

Oil price jumps to $115 after reports of 'extended' Iran blockade | Microeconomics: IB Economics | Scoop.it
From www.bbc.co.uk - April 29, 7:04 AM
The price of crude oil has swung sharply as uncertainty over the war in the Middle East continues.
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Same old, same old. 

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April 27, 3:28 AM
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Oil rises as US-Iran peace talks stall

Oil rises as US-Iran peace talks stall | Microeconomics: IB Economics | Scoop.it
From www.bbc.co.uk - April 26, 9:16 PM
President Trump said on Saturday that the US had cancelled plans to send a team to Pakistan for negotiations.
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Graham Watson's insight:

D&S and oil prices, once again. Geopolitics and the oil market. 

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