Prices of Crude Oil have plunged this year from more than $100 per barrel to less than $30. This is a huge shock for the market as prices were supposed to remain higher at all times. The reason for this startling fall is that all the countries of the world are adding more storage facilities as the reserves dwindle.
It will be only a matter of time before some other country starts exporting crude oil and this will trigger a worldwide increase in prices, which should cause the crude oil price to be a bit more predictable. There are only two options available at this point in time as far as this price outlook is concerned.
The first one is that prices may drop further and there will be no way of bringing them down. However, this is a possibility and these nations are aware of it. This is the only way to bring down the price and do it in such a short period of time.
The second option is that they will keep the prices up higher and this is not at all an attractive option. All the economies of the world are functioning like they are on life support. Oil will have to be imported and this will push up prices, which is going to create a lot of problems for the governments and the economies of the world.
If you look at it in the long term, oil is the lifeblood of all the economies and if this is sold in higher than market rates, then it is all over for all the economies of the world and they will start falling apart. If you don’t think this will happen, you haven’t been paying attention.
If we take a step back and look at oil supplies, the USA has just about the same amount of oil as it did a few years ago and this is the biggest glut we have ever had. The Persian Gulf is full of oil but it doesn’t move and thus the prices stay high and just don’t fall below the market rate of prices.
The world has just enough to last us until the year 2030, but we will not get it at the current rate, which is why oil is sitting in storage. What would happen if all the oil started moving and this would be a good scenario for all the economies and their financial standing.
But, I do not believe the Oil companies will sell their crude oil at more than the market rate because it is so much money to be made out of it. They have billions of dollars tied up in it and they are not planning to pull it out in a hurry as they lose billions of dollars every day.
But, the prices are going to go down and this will force them to change their strategy of selling crude oil at a certain price. If they keep on doing that, then they will simply push the prices down further and so there will be a shortage of oil in the future.
In the current scenario, the best thing for the US is that it should begin exporting as much oil as it can, which will be exactly what the rest of the world wants and this should set things right and bring down the prices. However, this is only a thought as far as the US is concerned.
It is going to be very hard for the rest of the world to get hold of all the oil it needs and this is the biggest problem. If the US exports more oil, then the other nations will be forced to get involved and this will get rid of the glut situation.