Politics of the Global Oil Markets
Following the IEA’s warning that record oil prices were needed to balance demand with supply, Gazprom has predicted prices of up to $250 per barrel in 2009, but this is more likely due to a weakening dollar than rampant demand. While prices have been rising steadily as a result of supply constraints, there is no sign of a drop off in demand, suggesting that further increases are inevitable.
Oil prices have already hit a record high of $139.89 per barrel and many parties have predicted that they will reach levels of $150 or even higher. Gazprom, which currently operates a mostly gas based business, has forecast that oil will reach $250 per barrel during 2009.
The usually quoted fundamental drivers for rising oil prices are well known: steadily increasing demand worldwide, particularly from the burgeoning Asian market; complications and hold ups with supply; and a limited refinery capacity. However, it is unlikely that the market would be sufficiently sensitive to generate the recent headline grabbing prices in such a short space of time if these were the only factors in consideration.
Big movements in the oil price have significant ramifications around the world. But just what makes the price move and how do the oil markets work? Outline the key issues surrounding oil market fundamentals at a time of unprecedented levels of price volatility with this report
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