How and why the deterioration of the price of crude oil?
How and why the deterioration of the price of crude oil?
Dr. Latif agent
The relationship between the impact of the price on the rent income from crude oil markets and the impact of the urgent need for oil revenues to the price of oil. That the mutual relationship that has made the price of oil with the passage of time in a row this fall. Before you absorb this result has to be intellectually analyze the quality of oil supply
If increased production of oil introduced in the crude oil markets by the Organisation for Economic Co-operation and Development countries (OECD) any industrialized nations rising oil prices, because the cost of extraction is the highest in the world and must be a high price for oil production total cover that cost. The price of oil in a unified global markets for crude oil and regardless of the oil-exporting state, which comes from various countries to the UN, where its market and determines its price. This unified oil price also includes a least cost as the cost of producing countries (OPEC). It would receive a difference in the cost of extraction and the difference is called in the language of differential rent economy and a return to the OPEC countries and the State Oil extracted at a lower cost than the cost of the industrialized nations. If the price of oil will fall down with him rentier income differential and if the exporting country of OPEC based its budget on oil revenues and will be forced by the adoption of the budget to increase its oil production to meet the shortfall, which happened as a result of the drop in oil price in the international markets. This will result in increasing supply by OPEC countries to the deterioration of the common price of oil in international markets, 'so forth, and since this low price fills the total cost of oil production in addition to the minimal amount of differential rents will continue to OPEC countries to increase production and decrease the price of oil so increase production forth. Accordingly, relatively OPEC's share of oil sales will increase and will acquire a broader view of how the oil market and oil at the expense of industrialized countries with a higher cost share. Increasing demand for oil from OPEC oil would fill little cost. Here increase oil demand will not lead to a price increase. If the request is not increased, but display OPEC oil rises, oil fields will have a higher cost to stop oil extraction. The high price of oil would wait to resume production. But why I got those vicious circles that led to the deterioration of the price of oil continued with time? That was due to the beginning of that vicious circles, which began to show an increase of oil-largest oil producer and is the lowest cost Saudi Arabia, followed by the Arab Cooperation Council (GCC). To increase its stake in the oil market. Since the price of oil the leader of all the production of clean energy and coal prices, will decline clean energy industry and increase manufacturing and heating oil adoption.
Thus it will decrease the cost of the manufacturing industry in general and especially based on petrochemicals, as well as increasing demand for cars of the cheap price of gasoline. And will benefit cabinets and budgets of industrialized countries from energy taxes because of lower oil price allows them to increase taxes on oil derivatives. It's the court's plan to revive the industry and capital investment at the expense of OPEC countries.
The low price of oil reduces the investment industry, which is trying to move away from oil consumption and compensated clean energy development any increase adoption of the manufacturing industry on oil consumption. Note that the US industry and their satellites, such as the Chinese and Indian industry and developing countries are lagging behind in comparison with European and Japanese industry, which has moved away slowly and the greater the price Oil for oil consumption and offset by alternatives such as clean energy and closer to the economy, the consumption of oil for its high price, unlike Alomirkh industry dependent on oil consumption cheap as the price of oil in America less than its price in Europe and Japan, this formula has made the global demand moves of the US goods to the demand for Industrial Products European and Japanese-sparing consumption of oil derivatives. So in the interest of America that the price of oil products low, so demand for its industry by India and China, as well as the return of demand for its products that consume a lot of oil derivatives back.
That those vicious circles that led to the reduction of the price of oil, respectively, began political pressure pushing Saudi Arabia to increase its supply of oil and since she's biggest oil exporter, where exports a third of OPEC exports and objected to reducing the Organization of Petroleum Exporting Countries production (OPEC), was unable any country in the OPEC cut production on their own to stop the deterioration of the price of oil, but increased production to meet the shortage of revenue due to the deterioration of the price of oil. The motivation for the workshop brancher is political pressure. Due to the global economic crisis that has befallen in the manufacturing industry and the decline in demand for cars and different wheels and the high cost of the industry that rely on petrochemicals feedstock. The oil price decline to a third of what it was led to the recovery of the manufacturing industry and solving Alaalmih.lkn the oil industry and oil extraction with the economic crisis and the high cost of extracting clean energy will not remain indefinitely waiting idly hands are also part of the economy of the industrialized countries. Those industries that aspire to rival the increase in oil prices and the commander of the price. The hopes of the Organization of Petroleum Exporting Countries OPEC to cut production in order to be able to return to investing in clean energy industry of the sun's heat and the movement of water, air and oil production a higher cost but manufacturing in general recovery, which has increased its dependence on oil consumption will lead to increased demand for oil and its derivatives. If OPEC does not clog the increased demand will be able to oil fields with the high cost of bridging the growing demand for oil and must be for the price of oil to rise to cover the high cost. The rise in the price of oil will be skipping and consecutive rises because of the return of the growing dependence on the one hand and the recovery of the industrial economy on the other hand, most notably auto production due to higher paid-up demand from lower fuel price. Add to that the industrial production and the depletion of oil extracted and sessile expansion at a cost of extracting the oil will turn toward the oil fields with a high cost in accordance with the theory of David Ricardo. And therefore it has to be high price and thus imposes itself on economy policy. So strategic high oil prices inevitably tactically begin at the end of the third month and downright this year.