Emphatically, oil is an essential product in the entire universe. The mentioned product swanks upon human dependence coupled with the sole drive of myriad economies. Oil prices significantly impact on the country’s economic expansion. Consequently, it is vital for oil producers to consider the cost of production. The cited cost, adversely dictates innumerable populace utility on the valuable product. Worth mentioning, the current news on oil prices is out rightly encouraging. The paper endeavors to explicitly highlight on the current information regarding oil prices.
Prevalently, oil prices have significantly reduced. Myriad factors have instigated the mentioned fall in prices. In US for instance, oil is majorly extracted out of shale compositions. The said compositions employ hydraulic fracturing making, subsequently making it easy to obtain the most needed product. The economical fracturing is a major driving factor towards lower oil prices (Bowler n.p). Additionally, conventional crude that seems to be expensive have been abandoned by major producers. The highlighted abandonment has led to the embracing of more cheap, efficient and effective means of production. Similarly, wide varied markets coupled with a politically interrelated supply and demand factors have influenced the volatility of prices. Substantially, reduced demand levels of crude oil among European Union economies, as well as, the considerable development in United States crude oil production is a feature. Consequently, the mentioned factors have led to a massive fall in current oil prices.
Typically, there stands to be losers and gainers in the current fall in oil prices. Worth mentioning, Venezuela which gets rated among the world’s principal oil exporters laments in the fall of the oil prices. Last week, Venezuela’s Foreign Minister held an impromptu Opec convention. The mentioned meeting aimed at allowing its producers to maintain prices exceeding $100per barrel. Typically, some members have imposed a price of $120 per barrel. The mentioned trepidation is due to the dwindling economic status of the mentioned country, coupled with unstable social spending programs. Similarly, Russia solely relies on oil revenues for income, calumniating to 70% of its total revenue (Bowler n.p). Conversely, the fall in oil prices makes Russia lose approximately $2 billion for each dollar fall in the oil price. Russia, therefore, suffers budget constraints.
The gainers of the suggested fall in fuel prices also exist. For instance, Saudi Arabia that is the world’s chief oil exporter, as well as, Opec’s mainly prominent member supports the fall in oil prices. Saudi Arabia intends to cut down its production. The major reason for the cut down is to instill discipline towards specific members of Opec oil producers. Categorically, Saudi Arabia proposes an oil price of $85 per barrel. Furthermore, the specified nation commands a deep pocket reserve fund of $700, thereby, would withstand the low prices. United State has efficient means of oil extraction through hydraulic fracturing. The mentioned makes it easy for US produce oil, therefore, supporting the fall in oil prices. United States have proposed a price of $80 per barrel (Bowler n.p). Typically, the lower class individuals in the society would gain due to the enhanced purchasing power.
Work cited
Bowler, Tim. Falling Oil Prices: Who are the Winners and Losers?. BBC Online Business, 2014. Available.
http://www.bbc.com/news/business-29643612
