Oil tariffs vary proportionally to the fluctuations in the supply and demand. We have seen an acute price-drop in oil prices throughout the world from the past seven months. This consequently has led Energy trading countries a remarkable victim of notable decline in its income. Whereas consumers in many importing countries are likely to have to pay less to their fuel expenditures.Oil prices have been through a stable price era from 2010, till the mid of 2014 costing $110 for a barrel. but pricing have been enormously halved since June 2014. Brent crude oil has now dipped below $50a barrel for the first time since May 2009 and US crude is down to below $48 a barrel. Global oil prices in the second week of January,2015 came down to $50 a barrel from $111 in June,2014, almost a 60 % fall in prices.
Analysts and producers are trying to come to good understandings of the causes behind this drastic sharp decline in oil prices. the vital key drivers behind are as follows:
US Oil Boom
America’s oil boom is well recorded. manufacturing of shale oil has ascend by roughly 4 million barrels per day, since 2008..first time snipping of the imports from OPEC has been experienced in 30 years.
Libya: Back in action
According to the predictions of the analysts, yield of Libya would flutter around 150,000-250,000 thousand barrels per day. It transpire to be endowing 810,000 barrels per day in September because it succeeded to resolve all its interior disruptions much quicker than anticipated
Illumination of OPEC
OPEC was beloved not to govern in the production as it has done traditionally in the past In order to tranquil the market share Saudi n Kuwait has been an active members in the price war for oil consequently lowering its oil prices
Pessimist expectancy of ECB
European Central Bank president Mario Draghi has left investors concerned about the continent’s slow growth. In August 2014 Germany’s exports showed a decrease of 5.8 percent , which increased the fears of already anxious investors about EU’s largest economy.Across the Eurozone, the IMF again lowered its growth forecast to 0.8 percent in 2014 and 1.3 percent in 2015.
Politics involved reasons
Saudi strategy of endowing to low prices to work its best to subvert the oil reliant economic nations like Iran and Russia. Consequently this strategy has its disastrous effect on USA as well because of its contribution to oil production in the world.
According to the latest estimates made by the EIA Brent crude oil price will average $59/barrel during the 2015.if we talk about the long term expectations, it is estimated by the EIA that they will average around $75 during the year 2016.
According to the long term projections made by energy experts, it is expected that oil prices will continue their generally upward spiral in the years ahead if global energy policies remain the same. Rapid economic development in China and India, coupled with relatively consistent energy use in industrialized nations, will likely strain the world’s ability to meet a projected rise in energy demand of some 1.6 percent a year until 2030. So it is expected that oil prices will reach $170 per barrel till the year 2030 .