OIL PRICES
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s oil prices continue to fall precipitously, the economic fallout can be felt across Europe, in what is a game-changing development. Brent crude oil per barrel has dipped below the symbolic $50 per barrel, and has been trading for as relatively little as $45.75, the lowest in the past 10 years. The price of WTI crude has fallen even further, beneath the $45 per barrel mark, and has only been lower over the past decade in 2009, in the midst of the severe global recession. Bank of America Merrill Lynch’s latest Global Energy Weekly Report states that the supply side is the main driver of the reductions in the price of Brent crude oil. According to the report, Libyan oil production is making a comeback while
Saudi Arabia has failed so far to react to the changed circumstances. OPEC has all but given up its traditional role of keeping supply and demand in check, and the policy to continue oil production at the same level has been
backed by the United Arab Emirates, who believe that shale oil producers are necessary, and that the market will stabilise. Sabine Schels, head of fundamental commodities research, for the Bank of America Merrill Lynch’s
Graph 1: World economic growth,% change y-o-y World
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There has been an increase in production from sources such as the shale oil boom in the US. This ensures that the crude oil process is not as sustainable for the non-conventional oil producers. Diego Valiante,
2014E*
US Euro-zone Japan OECD
head of capital markets and a research fellow at the Brussels based Centre for European Policy Studies
2015F*
China India Brazil Russia 0.0
2.0
* E = estimate and F = forecast. Source: OPEC.
International Finance Magazine Jan - Mar 2015
4.0
6.0
8.0