Causes of Rising Global Oil Prices

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Recommended: global issues of oil crisis

Among the factors that often blamed the current price increases embrace the renewed geopolitical concerns in the Middle East, declining excess capacity in oil production, the production cuts agreed by the Organization of Petroleum Exporting Countries, the devaluation of U.S. dollar against other most important currencies, increased demand from rising countries and the noteworthy expansion in provisional dealings on oil futures market.

Traders and speculators can earn from these changes in values through purchasing or selling Crude Oil CFD's (Kanter, 2008). Over the long term, Crude Oil is likely to go after strict lines of trend, if one is able to classify a trend appropriately then it is possible to get earnings from those moves by selling "short" or purchasing "long" oil prices.

It is a fact that due to the war against Iraq the oil prices have increased immensely. If we look back at the past, it is evident that soon after the attack on Iraq, there was a sudden increase in the per barrel oil prices. As a consequence of increase in the oil prices, the rise in inflation has been observed. It is a common phenomenon that the increase in oil prices leads to increase in the prices of other commodities.

The end of the troubles in Iraq would stabilize the price of Oil avoiding volatility due to political concerns. The "just price "of oil is currently around $ 25 a barrel and may fluctuate in a "tunnel 3" in diameter $ 5 depending on the evolution of stocks, economic growth or compliance with quotas by countries OPEC (Mufson, 2008). Empirical studies show that the price of oil is relatively timely independent of OPEC's strategy: it is not OPEC fixed the price of oil; the market follows the trend of OPEC and at margin, price-sensitive o...

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...n over 11.6 million barrels a day of oil. At today’s price of over $100 per barrel, that is more than $1 billion a day being sent abroad, much of it to politically unstable countries.

Works Cited

Kanter, J. (2008). OPEC warns against military business. Retrieved from http://www.nytimes.com/2008/07/10

Mufson, S. (2008). United States offshore drilling debate. Wikipedia the free encyclopedia. Retrieved June 26, 2011, from http://en.wikipedia.org/wiki/United_States_offshore

Williams, J. L. (2007). History and Analysis-Crude Oil Prices. Retrieved on January 7, 2009 from http://www.wtrg.com/prices.htm.

Caffentzis, G. (2008). The peak oil complex, commodity fetishism, and class struggle. Rethinking Marxism vol. 20. Pp. 313–320.

Cooper, J. C. B. (2003). Price elasticity of demand for crude oil: Estimates for 23 countries. OPEC Review vol. 27 no. (1). Pp. 1–8.

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