The truth is vanished by expert’s effort. Oil analysts agree price will raise, but disagree on mystic number.
Can oil really hit $80?
At first sight, it appears that low oil prices are good for society. A low oil price helps us save dollars at the pump, acts as an economic catalyst making exchanges cheaper and thereby stimulating the economy. However, there are downsides as well, often out-of-sight-out-of-mind and we will address these today.
Change in the economic model
For the first time, we have entered an era of sustained low oil prices. For a start, we have explained the 'why' part of this article on the ongoing oil price war.
On the mainline, there is THE Saudi Arabia factor. The kingdom is relentless on the oil front. For June alone, Saudi Arabian exports increased to a three-month high at 7.456 million barrels per day, the highest for the month since 2012. The record of sorts happened with an oil production of 10. 55 million barrels per day. For July, oil production increased a tad higher to 10. 67 million barrels. Our analysts expect more oil production in August. For its part, Saudi Arabia stated that the production surge was due to seasonal domestic demand and also because of customers asking for more oil globally. Partly that's true as output rises in summer due to increased electricity consumption but, well, the power plants burned less oil to generate electricity compared to the previous year.
When did oil prices expect to rise again?
Are we really in trouble?
More than half of the publicly traded companies in Houston are oil and gas-related. Nearly three-fourths of them have dipped lower in the past 12 months.
U.S. oil production might see a decline of another 800,000 barrels a day, especially when considering not only the existing overproduction but also new output coming from Brazil, Iran, and potentially Libya. This global supply-demand imbalance isn't going to correct itself anytime soon.
In all the countries discussed, the scenarios are myriad but stories similar. Export earnings of oil-producing countries slip down affecting income generated. In turn, low-income cuts government spending on food, education, and medicine. Well, low oil prices stymie growth. Layoffs are common and since the oil industry supports a whole gamut of allied industries like transportation, hospitality, and townships, they affect all. Further, cheaper oil prices mean low investment and that would soon cascade as high oil prices. Oil has been around for centuries. Noah used the pitch to seal his ark, didn't he? The Egyptians used to pitch in the pyramids and mummies. For those saying, we can do without oil. Think again, can you?