As reported in last month’s issue of gasworld magazine, the slide of the brent crude oil price (per barrel) continues to dominate the news headlines of the new year.
The reduction from $115/bbl in June 2014, to $70/bbl in early December, and closing the year at $53.5/bbl signifies a 53.48% decline in the price per barrel of oil. At the commencement of 2015, the price per barrel continued to decline, temporarily dropping below $50 a barrel, before climbing again and reaching around the $50 marker by close of play on 9th January.
But what is forcing the price of oil to drop so rapidly? Over-supply and reduced demand for oil due to slow economic growth are the chief reasons. Explaining the cause and effect of the situation is gasworld Business Intelligence’s Senior Analyst, Richard Jones, who described the situation as a “test of strength”. He said, “In December Saudi Arabia heavily influenced OPEC’s move not to cut supply (of oil) despite opposition from other members. The country is mindful of its experiences of the 1970s – when sudden price increases caused fresh foreign investment in alternative supplies (thus reducing the Middle East’s market share) – but also of its new competitors in the US.”
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