One of the most burning problems of the contemporary society is the ultra low price of crude oil worldwide. Still, it is surprising to see that the OPEC, which is a union of some of the world’s major producers and exporters of crude oil, is still reluctant to start cutting down on their oil production. If you have been in financial markets for a while, you probably know that amid declining global demand for crude oil (mainly triggered by the economic slowdown in China - the world’s second biggest economy and the biggest consumer of crude oil), the steady and high level of oil production leads to oversupply at all times. Apparently, oversupply triggers a price collapse. The bigger it is, the harder the prices fall eventually. This is the case in the global market of crude oil right now. The prices have already fallen by more than 50% since its local highs set in mid 2014.
According to Masterforex-V Academy, at first it seems illogical and storage that the OPEC is willing to trigger low prices thereby harming their income. With that said, there is only one sane explanation of this situation. It seems that the OPEc wants to preserve and even to increase its market share, thereby ousting some other players in the global oil arena.
While some experts say, this is done to harm Russia, Iran and other non-OPEc exporters, others assume that this move is targeted solely at the USA’s shale oil revolution. The thing is that shale oil production is a rather costly business. With that said, low oil prices for a long time are destined to put shale oil producers out of business. There is not doubt that Saudi Arabia and other Arab exporters are looking forward to become the major players in the oil markets since they can keep on producing oil even at $50/b and still being safe from economic and financial pressure.
Yesterday, the IMF released another forecast on the near-term future of the global economy. The bottom line is that the global crisis is still underway and accelerating. Nevertheless, they predict the global GDP to boost by as much as 3,5% this year.
