Back when oil was over $100, I thought I understood the reason: China, India, and other developing countries have a growing middle class. Those swelling ranks are buying cars: there are likely thousands, if not tens of thousands, of new drivers on the planet each month. They didn’t use to buy gasoline; their sudden demand for it increases world oil consumption.<\/p>\n
At the same time, I reasoned, oil is relatively rare compared with the demand for it. Supply cannot necessarily increase as quickly as the developing world’s demand. Therefore, the price should be much higher than it was before the rise of India, China, Brazil, and other transforming economies.<\/p>\n
In fact, the supply of oil is more responsive than I (and perhaps some others) realized. American production of oil more than doubled from around 4 million bpd (barrels per day) in 2009 to 9.7 million bpd in 2015. Considering world oil consumption is about 96 million bpd, the Yanks can supply 10 percent of the entire world’s needs.<\/p>\n
At the same time, US oil consumption has decreased by around 12% since 2005. It suggests that, perhaps, economies will eventually progress past dependence on oil.<\/p>\n
Some oil exporters are now reflecting that oil not sold today, may never be. Therefore, the oil that’s cheap to produce should be sold at a profit now. That idea, almost impossible to imagine fifteen years ago, squares off against the opposite, much older one: that development means oil consumption.<\/p>\n
It’s very hard to predict the price of oil:)<\/p>\n
Source:<\/p>\n
qz.com<\/a><\/p>\n iea.org<\/a><\/p>\n weforum.org<\/a><\/p>\n