The Continuing Decline Of Oil
Dennis Knox
Offshore Energy Construction & Installation Professional: Creative & Innovative Solutions to Offshore Project Challenges
The Christmas present to the world the last two weeks has been the continuing decline of oil prices. World-wide supply continues to increase but Brent crude futures have dropped to around $36 a barrel. Futures traders are saying that the price of US crude will continue to fall, possibly as low as $20 a barrel. In that case Brent crude can be expected to follow.
This situation will come under increasing pressure as things like trade embargoes on Iran are lifted and oil starts to flow from there in 2016, to join the new supplies coming out of America and Libya. The expected date for Iranian exports to join the excess oil puddle is around February 2016, just as the northern hemisphere heating demands start to drop and fuel oil sales reduce. The southern hemisphere is simply too small a market to pick up the slack.
The fall in oil prices has forced changes in the economic strategies of many countries, such as Nigeria and Venezuela, but also affected are the Arab states. In the last two weeks Saudi Arabia, Kuwait and Bahrain increased base interest rates to protect their currencies. In the last week the Federal reserve in the USA has hiked up interest rates by a quarter percent. The last rise was ten years ago.
America is now contributing to the flow into the oil glut by passing legislation removing the forty year old ban on crude oil exports. This was imposed back in 1975 as a protective measure for the US economy after the oil crisis of 1973-74.
OPEC remains the biggest producer at 31.5 million bpd. Russia follows with just over 10m bpd. Recent announcements of increased production from North Sea producers is not helping the over-supply, but they have no choice. Even at these prices the operators need the revenue.
For all of us involved in the offshore oil and gas industry this is not much of a Christmas present, but it does give us impetus for a New Year’s resolution to find the silver lining in all this, uncover the opportunities and if necessary change direction completely.
Offshore Construction Manager
9 年I think it is going to be a long wait before Oil price rise again , however there is a silver lining to this dark cloud hanging over us unemployed Oil workers ! There will be less available funds for Terrorists since most of this money is coming from Middle East Oil rich countries who are now feeling the squeeze so maybe we are heading in the right direction after all ??
Managing Director for PetroOverseas Group; Co-founder of Sinostan Consortium & Thinkingtank；Founder of AUDO. 天行健，洲际亚元铸金瓯
9 年No other economic collapsing bad news these days but a little better than 2015 economic speeding up as mainstream media reported. So the oil price would not go down too much and too long, Getting ready for a good rebound above $40/bbl in next few days.
Offshore Energy Construction & Installation Professional: Creative & Innovative Solutions to Offshore Project Challenges
9 年Good point Ejaz. One thing you can rely on is that governments are always the last to respond and reduce taxes on oil products.
Head of Commercial Project Management Gas Services - United Arab Emirates
9 年We all know that oil plays very important role in human life. From transportation to electrification, communications to cooking, we all are somehow dependent on oil in our daily life. Now when oil prices are touching the bottom low of last seven years, l couldn't see the impact of low oil prices to cost of living of the general public. Now the question arises here is that, who is making most of the money out of low oil prices ? Any thoughts on this ?