Recent History 2

Gulf War I did nothing to Oil prices. Saudi Arabia at the behest of US kept pumping Oil as much as the world needed provided the US got rid of Saddam Hussein from the neighborhood. World heaved a sigh of relief as Gulf War I shooting ended. During and after the Gulf War I, prices remained stable at $15 to $19 a barrel. Since then, the US and the European demand have increased roughly at the rate of 6 to 8% a year. This has strained the supply situation. In addition from 1999 onwards China and India added on to the market demand as big importers. The latter with rapidly increasing economies put a strong pressure on demand side of the equation. Oil prices began to increase once again. By year 2000, the prices shot up to about $27 a barrel. Also superimposed are events, which impacted the supply and demand, and major events, which impacted the prices.
Crude price have been hostage to the world events. Also production cuts or restoration by OPEC gravely impact the market place.

Recent History

Prior to October 1973 the world oil suppliers had very little say in setting the Oil prices. It was the importers – big oil companies, which set the prices. Arab-Israel war of 1973 changed that. Oil became the weapon of political pressure. Producers became assertive and organized themselves into the cartel (OPEC). This group not only protected the producer’s interest but also manipulated prices during an economic or political trouble. Oil prices jumped from about $3 a barrel in 1973 to $12 a barrel in 1974. There upon OPEC which had been formed as a study and statistics organization in 1960 became a primary tool to set production quotas for the member countries, hence the prices. Oil prices reached $30 a barrel from 1978 to 1981.

Taking of the US Embassy and its diplomats as a hostage in Tehran , Iran and expelling of Shah of Iran provided the ammunition for this sudden jump in prices. This uncertainty and election of President Reagan resulted in a major economic recession from 1981 to 1983. The demand reduced and the oil producers relented. Individual OPEC members kept pumping Oil in competition to each other to maximize cash inflow to them hence crashed the prices. This was good news to the rest of the world. Oil prices again hit $13 a barrel in 1985. This was the same price as in 1974.

World Crude Supply And Demand

World Crude Supply And Demand

The world crude prices have made everyone involved in the oil business such as producers, the traders and the refiners very joyfull, for them its better than a huge bonus, in that they now have high Oil prices . The profits that they have made are billions of dollars in cash flow at the expense of helpless consumer in the last months.
Annual world demand for the Crude Oil today is about 82 to 84 million barrels a day. Of which OPEC produces about 38 million barrel a day. Most of the OPEC oil is in Middle East and a bit in Latin American countries. Remaining world demand is met by local production (US in Gulf Coast , Alaska etc.; Europe in North Sea; Russia in the Siberian & Central Asian Oil fields; Canada by the Alberta & Deep sea drilling in the east coast etc.). Smaller producers in Africa and Asia also do their best to fill up the demand. Quite a bit of production is internally consumed by the industrialized and semi industrialized world. Gap in demand and production is imported. US imports 45% of its Crude oil needs from Middle East , Venezuela , Nigeria , and Mexico . Europe and newly industrialized Asia (Including China and India ) import as much as 30 to 60% of its Oil needs. Japan is worst placed, where almost all of its Oil is imported. This supply shortage has given the Crude oil exporters an iron clad stranglehold over the world economies. A minor disruption in supply in Nigeria for example causes a jump in Oil prices in the world markets. Similarly as the bombs start falling anywhere in the Middle East for any reason, it ultimately translates into rising oil prices. Hence the world is a hostage to this situation with no relief in sight for a decade or two.

No Good News

After searching all available information and after spending almost all morning with our local news analyst we were able to determine that the black gold as we call the crude, fell today...the reason being that oil and gas producers in the Gulf of Mexico restored more output after a mild storm triggered evacuation and production cuts.

US crude for November delivery fell to $81.14 a barrel by earlier this morning to stand nearly $3 below the all-time high set by the October-month contract on Thursday. The local price for the Europe..London Brent crude shed 45 cents to $78.85 a barrel.

The good news is that in the US Gulf yesterday afternoon a tropical depression passed without causing damage, however due to this 595,000 barrels of daily crude oil production, remained shut...due to the weather some 62.7 per cent of the Gulf's oil production has been shut, the highest cut from the region since massive hurricanes in 2005 churned through the region.

All this affects the world crude situation as everything is linked...A string of bullish factors... including falling US crude stocks, worries about inclement weather destroying oil facilities, a half-point cut in key US interest rates and a weak dollar - pushed oil to a record high last week.

WILL THIS CONTINUE...

Dollar Falls to All-Time Low

This morning having a look at our daily news report and in special regarding the crude worl situation we were able to notice that to our surpprise the dollar fell to the lowest ever against the euro since the 13-nation currency's debut back in 1999.

The U.S. dollar fell to an all-time low and posted the biggest monthly drop against the euro in almost four years. The dollar may decline further this week.
The dollar fell to $1.4267 per euro in September, reaching the record low of $1.4278 on 28-09-2007. It was the biggest monthly decline since December 2003.

The report also mentioned the consumer Confidence Plunges to almost a two-year low. . this will have the effect that the dollar will continue to fall while on the other hand we have the price of crude on a daily upward movement, but as we all now the crude price is affected by anything ..by any happening around the world, so for the time being we will face these fluctuations...