General Knowledge Facts: Factors affecting Global Crude Oil prices [affecting pertroleum futures of March 2018]
Today, we'll present you important facts regarding factors affecting global crude oil prices.
The first and foremost thing to remember is that Crude Oil is the main input cost for any economic activity in the modern world. Every factory indirectly or directly requires Crude Oil to produce output. Thus, the price of any commodity depends on two factors: demand and supply.
Now, Oil prices fell for a second day on Feb 2018 due to :
OPEC, Russia and U.S.
Among OPEC countries, Saudi Arabia is the lead exporter of Crude Oil. Saudi Arabia is all founding member of OPEC. OPEC is the Organization of the Petroleum Exporting Countries with 14 countries as member.
Recently OPEC and Russia has joined hands to stable the prices of Crude Oil.
“On February 20th Suhail al-Mazrouei, OPEC’s rotating president and energy minister of the United Arab Emirates, said the 14-member producers’ group is working on a plan for a formal alliance with ten other petrostates, including Russia, aimed at propping up oil prices for the foreseeable future. If it comes to anything, it could be OPEC’s most ambitious venture in decades”, reported the Economist.
“The International Energy Agency (IEA), the industry’s forecaster-in-chief, says America could overtake the two biggest producers, Russia and Saudi Arabia, this year” reported the economist.
On Feb 27, International Energy Agency Executive Director Fatih Birol said the United States will likely overtake Russia as the world’s biggest oil producer by 2019. As reported by Reuters.
It already overtook Saudi Arabia, the world’s top crude exporter, late last year.
U.S. crude oil production has risen by a fifth since mid-2016 to more than 10 million bpd C-OUT-T-EIA.
Key terms:
OPEC, Russia, US, China, India, IEA, Crude Oil
The first and foremost thing to remember is that Crude Oil is the main input cost for any economic activity in the modern world. Every factory indirectly or directly requires Crude Oil to produce output. Thus, the price of any commodity depends on two factors: demand and supply.
Now, Oil prices fell for a second day on Feb 2018 due to :
- Weak Chinese factory data triggered concerns of an economic slowdown that could lower oil demand [Slow Demand]
- in the United States, industry data showed an increase in crude stockpiles amid its soaring output [Increased Supply]
- OPEC and Russia decreasing oil export in line with US export. [controlled overall Supply ]
Which countries are the chief exporters of Crude Oil:
OPEC, Russia and U.S.
Among OPEC countries, Saudi Arabia is the lead exporter of Crude Oil. Saudi Arabia is all founding member of OPEC. OPEC is the Organization of the Petroleum Exporting Countries with 14 countries as member.
Recently OPEC and Russia has joined hands to stable the prices of Crude Oil.
“On February 20th Suhail al-Mazrouei, OPEC’s rotating president and energy minister of the United Arab Emirates, said the 14-member producers’ group is working on a plan for a formal alliance with ten other petrostates, including Russia, aimed at propping up oil prices for the foreseeable future. If it comes to anything, it could be OPEC’s most ambitious venture in decades”, reported the Economist.
“The International Energy Agency (IEA), the industry’s forecaster-in-chief, says America could overtake the two biggest producers, Russia and Saudi Arabia, this year” reported the economist.
What is the role of India and China in the Crude Oil prices?
Both countries are large importers of Crude Oil. Note that the China is second biggest economy in the world, after US. Recently, tougher rules to curtail pollution level were implemented on the Chinese factories. This has also led to weakening demand of Crude Oil in China. Thus, thereby reducing Crude Oil prices. While the week-long Lunar New Year holiday this month in China disrupted business activity, traders also pointed to tougher pollution rules that curtailed factory output.Role of US in Crude Oil?
US entered the global competition of Crude Oil market in the year 2014 thereby causing the global oil prices to fall rapidly. In Feb 2018, the Data from the American Petroleum Institute showed that crude inventories rose by 933,000 barrels in the week to Feb. 23, to 421.2 million.On Feb 27, International Energy Agency Executive Director Fatih Birol said the United States will likely overtake Russia as the world’s biggest oil producer by 2019. As reported by Reuters.
It already overtook Saudi Arabia, the world’s top crude exporter, late last year.
U.S. crude oil production has risen by a fifth since mid-2016 to more than 10 million bpd C-OUT-T-EIA.
Key terms:
OPEC, Russia, US, China, India, IEA, Crude Oil
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