I have been researching why oil prices are plummeting on a consistent basis throughout 2014. The answer is extremely complex, but basically it comes down to the lack of demand while the supply is massively increasing. With new projects going on around the world, (such as in North America like the tar sands, fracking and horizontal drilling) they have thrown the supply and demand equilibrium out of whack. The US has added 4 million new barrels of oil a year into the already flooded market. This problem is going to severely affect the US, Canada, Russia, China and especially the main oil producers like Qatar, Kuwait, Angola, UAE, Saudi Arabia, Venezuela, Libya, Iraq, Algeria, Nigeria, Ecuador and Iran. Since 2010, oil has been floating around $100 a barrel and for the first time since the global financial crisis in 2008 it has dropped under $50. It is projected by several investor groups that oil will eventually drop below $30. Small countries are trying to persuade the larger oil manufacturing countries to reduce production so they can break even on their costs. This drop in oil is a direction correlation on the state of the global financial market. (The video in the CNN link below is the most dumb down version that is easy to understand)
Posted on: Tue, 06 Jan 2015 04:24:20 +0000
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