0647 GMT January 19, 2020
The collapse in oil prices was reversed at the end of January; what factors gave a nudge to the rise in prices?
There are three reasons which contributed to an increase in oil prices. First, some US oil shale projects ran out of business as declining prices made them uncompetitive in view of high drilling costs. Since such projects were driven out of the market, the price of crude rose after six months of progressive decline. Only if oil prices remain over $70 will shale oil drilling be competitive.
Second, non-oil producing countries have invested in the oil industry, which resulted in a drastic decline in global oil prices, but cooperation among certain oil firms was responsible for the hike in crude prices.
Third, the global oil market saw six-month lows due to politically-motivated reasons. Fortunately, profiteers have been caught off guard by speculations about increased cooperation among oil producers, which reversed the falling prices.
Do you expect crude prices to shoot up to $100 a barrel again?
The next two years will see oil prices hover between $70 and $80 per barrel, but they will not reach $100.
Why do you think black gold will not reach the peaks it witnessed in June 2014, standing at over $100?
Since oil producing nations are helping industrial countries hit by economic crisis, crude prices will unlikely shoot up to such rates.
Do you believe that a host of conspiracies have kept oil prices down?
Saudi Arabia might have conspired to bring prices down. Likewise, the US could be considered as the accomplice to the Arab nation to help it achieve its objective.
However, we should keep in mind that the Saudis have pushed prices down to undermine oil drilling from shale projects and secure their own interests.
Haven't the plummeting oil prices nudged officials towards weaning the national economy off petrodollars?
It is desirable to steer the economy away from oil-based revenues. Experts have always called on governments to adopt strategies to do away with dependency on oil. The incumbent administration should cut expenditure and take big steps to end oil dependency.