International Crisis Does Not Impact Oil Price
Posted: 08/27/2014 05:08:45 Edited: 08/27/2014 05:08:45 Clicks: 781
It seems that the international crisis such as in Ukraine, Iraq and Libya do not impact oil price. On August 25, Deutsche Welle pointed out that Brent oil price had declined to the lowest level in 2014 last week. Even now, Brent oil price is still about 102 dollars per barrel.
At the end of last month, the largest Libyan oil depot which was burnt due to conflict between several rebels in the capital of Libya, just caused transient fluctuation of oil price. Oil price in the U.S. is located at low level for a long term. In June, oil price was higher than present by dozen dollars.
Gerin, a researcher of Institut fur Weltwirt一Universitat Kiel analyzed that temporary interrupt of Libyan oil supply was compensated by increasing oil output in Saudi Arabia soon. “Meanwhile, global oil supply is increasing, especially shale gas technology utilized in the U.S., causing gas and oil output to grow with leaps and bounds.” He said.
Shale gas technology means that water mixed with chemicals is injected into shale bed by high pressure pump. Then gas or oil is squeezed out. The technology which is still in dispute in Europe has been widely used in the U.S.
Wall Street Journal reported that two American oil companies had already used shale gas technology for oil extraction. It is first time that using the technology in 40 years. The newest report published by IEA also considers global oil market situation is better than expectation.
According to the report of IEA, the oil demands decrease at an unexpected speed while global oil supply is increasing. It was mainly caused by global economic depression. At the end of July, IMF just reduced estimation of global economic growth from 3.7% to 3.4 % this year, due to economic growth in the U.S. and china slowing down and geopolitical influence caused by crisis in Ukraine and the Middle East.
European economy does not recover yet. The newest data of Eurostat show that economy in Eurozone stopped at the second quarter. German and Italian economy even shrank. Bad economic situations in industrial countries and emerging countries decrease oil demands.
At the end of last month, the largest Libyan oil depot which was burnt due to conflict between several rebels in the capital of Libya, just caused transient fluctuation of oil price. Oil price in the U.S. is located at low level for a long term. In June, oil price was higher than present by dozen dollars.
Gerin, a researcher of Institut fur Weltwirt一Universitat Kiel analyzed that temporary interrupt of Libyan oil supply was compensated by increasing oil output in Saudi Arabia soon. “Meanwhile, global oil supply is increasing, especially shale gas technology utilized in the U.S., causing gas and oil output to grow with leaps and bounds.” He said.
Shale gas technology means that water mixed with chemicals is injected into shale bed by high pressure pump. Then gas or oil is squeezed out. The technology which is still in dispute in Europe has been widely used in the U.S.
Wall Street Journal reported that two American oil companies had already used shale gas technology for oil extraction. It is first time that using the technology in 40 years. The newest report published by IEA also considers global oil market situation is better than expectation.
According to the report of IEA, the oil demands decrease at an unexpected speed while global oil supply is increasing. It was mainly caused by global economic depression. At the end of July, IMF just reduced estimation of global economic growth from 3.7% to 3.4 % this year, due to economic growth in the U.S. and china slowing down and geopolitical influence caused by crisis in Ukraine and the Middle East.
European economy does not recover yet. The newest data of Eurostat show that economy in Eurozone stopped at the second quarter. German and Italian economy even shrank. Bad economic situations in industrial countries and emerging countries decrease oil demands.
