The drastic drop oil global oil prices in the past few months was definitely one of the most unprecedented events in the global oil business. When a barrel of oil was priced at $115 in June 2014, a time period of only three months has brought about a downward trend, bringing down the price to $83.78. The reason behind this sudden fall, as perceived by a majority of expert across the world, is said to be the scramble of oil-producing countries for market positioning, more than anything else. The oil producing countries in the Middle-East, Saudi Arabia being at the helm of them all, have cut down their oil prices in order to hold their position of being the leading oil exporters of the world.
Owing to the excessive supply of crude oil in the market as compared to the demand, the slashing of oil prices is a combative tactic employed by them so that they do not lose their prominence as the leading countries and exporters in the crude oil business. But for other oil-exporting countries like Russia and Venezuela, the government as well as the key oil exporting companies have been engrossed in heated debate and discussions about the repercussion of this massive price drop, and to come up with protective policies to ensure that their business is not adversely affected by the same. For all counties that are lacking in oil supplies, the oil price reduction has come as a great relief to their economies.
A comprehensive analysis of all the key players and factors in the global oil business
While Saudi Arabia is at the helm of criticism for being the frontrunner of this price rise, one cannot simplify the situation to such a large extent. Demand and supply fluctuations are common in any free market, but when it comes to an industry which is as crucial as crude oil, one must look into all possibilities and scenarios rather than making a general assessment of the situation.
In the last couple of years, the oil production and oil transportation technologies have received a great impetus, and this has lead to the greater availability and supply of crude oil in the market. This has automatically led to the gradual reduction in the rates, but this not the only causative factor involved here. All over the world, oil-dependent economies are gradually leaning in and exploring the potential of renewable and alternative energy sources, thereby bringing down the demand to a certain extent as well. While the demand has declined over the last five years, as depicted by the reduced oil import figures, the supply has been augmented by new oil projects and better transportation facilities.
