The extent to which international oil prices will operate this year will not be finalized yet. However, there is no suspense: International crude oil prices remained strong until March. The price of light crude oil for delivery in February on the New York Mercantile Exchange reached a record high of US$100 per barrel in electronic trading due to the impact of armed attacks on Nigeria’s major oil-producing regions in major oil-producing countries in Africa on January 1. . However, most market analysts believe that international crude oil prices will fall from the current peak. 37 internationally renowned energy analysts have an average expected value of international crude oil prices for 2008 of US$74/barrel, which is slightly higher than the international crude oil price of US$70/barrel in 2007.
If the global economic growth slows down as expected, international crude oil demand will decline. However, market analysts warned that if the winter temperatures in the northern hemisphere are low, international crude oil prices will not drop significantly until March. If this prediction is accurate, it means that the international crude oil price will decline until the second half of 2008. If the average oil price in 2008 reached 74 US dollars / barrel, the current international crude oil prices will need to be pulled down to 60 US dollars / barrel. In response, the market has many objections. Goldman Sachs, Wall Street's most famous investment bank, raised its forecast for 2008 international oil prices to 95 US dollars per barrel. Previously, the company had predicted that international oil prices would rise to 100 US dollars / barrel, this shocking prediction has just come true in 2008.
World economy and politics will dominate oil prices The global economic and political situation will determine the direction of international oil prices. On the economic front, many economists predict that the global economic growth will slow, which will reduce the demand for oil. However, if the U.S. and European economies continue to grow, and China and India continue to maintain double-digit economic growth rates, this will be a sign that international oil prices will remain high. On the political front, if there is a war between the United States and Iran, a major deterioration in the security situation in Iraq and even the turmoil in the domestic situation in Nigeria will lead oil traders to worry about threats to oil production and sales, which will push up international oil prices.
Market speculation is also a factor driving up oil prices A few economists believe that the main reason for the soaring of international oil prices in 2007 was mainly the excessive risk of political chaos in oil-producing countries, not supply and demand. The oil industry analyst of the American economic investment company Oppenheimer pointed out that the international oil price is higher than the supply and demand fundamentals by more than 40 US dollars per barrel. However, he is not willing to predict that this situation will improve.
The analyst said that he has worked in the industry for more than 20 years and the current price of oil has been divorced from reality and cannot reflect the basic relationship between supply and demand. Oil traders fear that the United States will attack Iran and believe that international oil prices are reasonable for most of 2007. However, since the release of the U.S. national intelligence report, the possibility of a war between the U.S. and Iran has been greatly reduced, but international oil prices remain high, and speculation factors have played an important role in high oil prices. At the same time, he attributed the high oil prices in the market to the political instability in Nigeria because Nigeria’s political situation has been in turmoil for 40 years. The international community has long been skeptical.
Can Saudi Arabia increase production prices?
Increasing oil supply will not reduce international oil prices. Although Saudi Arabia is increasing its oil production capacity, other OPEC member states refused to increase oil production in December 2007, mainly because of fears of an increase in oil supply and a slowdown in the global economy. This will lead to a sharp drop in international oil prices and thus damage their interest. In theory, the Saudi Arabian government has a surplus production capacity of 2 million barrels per day, which is equivalent to the International Energy Agency's forecast for new global oil demand in 2008. If Saudi Arabia puts all its surplus oil production capacity on the market, it will effectively ease the current tight oil supply and demand relationship.
In the next five years, OPEC members hope to increase oil production capacity by 12 million barrels per day. However, it is hard to say whether this will keep up with the growth rate of oil demand in China and India. Some experts believe that OPEC’s increase in oil production will not necessarily lead to a drop in international oil prices. At present, the international oil market has sufficient supplies, and the international oil price is at a high level mainly due to other factors.
When Alternative Energy Reduces Oil Demand According to estimates by the United Nations and economists about the development trend of the energy industry, it will not take a long time for fossil fuel alternative energy to rise and reduce oil demand to pull down oil prices. The problem is that alternative energy sources such as wind power and solar energy cannot meet the world's growing energy needs, and the cost is much higher than that of oil and coal.
The US Department of Energy statistics show that only 6% of US energy consumption comes from renewable energy sources. In its recent research report, the International Energy Agency estimated that global energy demand will increase by 50% in the next 20 years, which is mainly due to the increase in demand of emerging economies. Of these, fossil fuels will provide 84% of global energy demand. Breakthroughs in alternative energy production technologies are expected to change this energy landscape, but there are no big signs yet.
If the global economic growth slows down as expected, international crude oil demand will decline. However, market analysts warned that if the winter temperatures in the northern hemisphere are low, international crude oil prices will not drop significantly until March. If this prediction is accurate, it means that the international crude oil price will decline until the second half of 2008. If the average oil price in 2008 reached 74 US dollars / barrel, the current international crude oil prices will need to be pulled down to 60 US dollars / barrel. In response, the market has many objections. Goldman Sachs, Wall Street's most famous investment bank, raised its forecast for 2008 international oil prices to 95 US dollars per barrel. Previously, the company had predicted that international oil prices would rise to 100 US dollars / barrel, this shocking prediction has just come true in 2008.
World economy and politics will dominate oil prices The global economic and political situation will determine the direction of international oil prices. On the economic front, many economists predict that the global economic growth will slow, which will reduce the demand for oil. However, if the U.S. and European economies continue to grow, and China and India continue to maintain double-digit economic growth rates, this will be a sign that international oil prices will remain high. On the political front, if there is a war between the United States and Iran, a major deterioration in the security situation in Iraq and even the turmoil in the domestic situation in Nigeria will lead oil traders to worry about threats to oil production and sales, which will push up international oil prices.
Market speculation is also a factor driving up oil prices A few economists believe that the main reason for the soaring of international oil prices in 2007 was mainly the excessive risk of political chaos in oil-producing countries, not supply and demand. The oil industry analyst of the American economic investment company Oppenheimer pointed out that the international oil price is higher than the supply and demand fundamentals by more than 40 US dollars per barrel. However, he is not willing to predict that this situation will improve.
The analyst said that he has worked in the industry for more than 20 years and the current price of oil has been divorced from reality and cannot reflect the basic relationship between supply and demand. Oil traders fear that the United States will attack Iran and believe that international oil prices are reasonable for most of 2007. However, since the release of the U.S. national intelligence report, the possibility of a war between the U.S. and Iran has been greatly reduced, but international oil prices remain high, and speculation factors have played an important role in high oil prices. At the same time, he attributed the high oil prices in the market to the political instability in Nigeria because Nigeria’s political situation has been in turmoil for 40 years. The international community has long been skeptical.
Can Saudi Arabia increase production prices?
Increasing oil supply will not reduce international oil prices. Although Saudi Arabia is increasing its oil production capacity, other OPEC member states refused to increase oil production in December 2007, mainly because of fears of an increase in oil supply and a slowdown in the global economy. This will lead to a sharp drop in international oil prices and thus damage their interest. In theory, the Saudi Arabian government has a surplus production capacity of 2 million barrels per day, which is equivalent to the International Energy Agency's forecast for new global oil demand in 2008. If Saudi Arabia puts all its surplus oil production capacity on the market, it will effectively ease the current tight oil supply and demand relationship.
In the next five years, OPEC members hope to increase oil production capacity by 12 million barrels per day. However, it is hard to say whether this will keep up with the growth rate of oil demand in China and India. Some experts believe that OPEC’s increase in oil production will not necessarily lead to a drop in international oil prices. At present, the international oil market has sufficient supplies, and the international oil price is at a high level mainly due to other factors.
When Alternative Energy Reduces Oil Demand According to estimates by the United Nations and economists about the development trend of the energy industry, it will not take a long time for fossil fuel alternative energy to rise and reduce oil demand to pull down oil prices. The problem is that alternative energy sources such as wind power and solar energy cannot meet the world's growing energy needs, and the cost is much higher than that of oil and coal.
The US Department of Energy statistics show that only 6% of US energy consumption comes from renewable energy sources. In its recent research report, the International Energy Agency estimated that global energy demand will increase by 50% in the next 20 years, which is mainly due to the increase in demand of emerging economies. Of these, fossil fuels will provide 84% of global energy demand. Breakthroughs in alternative energy production technologies are expected to change this energy landscape, but there are no big signs yet.
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