![]() These factors resulted in world oil demand increasing by 0.4 million of barrels per day (mb/d) over 2002. These include colder than normal weather in Asia and North America, low Japanese nuclear output increasing the demand for oil as an energy substitute and higher Chinese demand. Nevertheless, a number of factors have recently increased demand for oil. For example, in 2001, US oil consumption per dollar of real GDP was 10.4 thousand Btu (British thermal unit), down from 12.7 in 1991 and 18.8 in 1971. Over recent decades the world economy has reduced its relative dependency on oil when measured in terms of oil per dollar of real Gross Domestic Product (GDP). 3 While the increase in real oil prices is more muted, the upturn in prices to date suggests that the global economic recovery is likely to be constrained in the short term irrespective of future developments. This sustained increase differs from the behaviour of oil prices during the early 1990s Gulf War when oil prices increased substantially over a relatively short period of time before war was declared, and then dropped to an average of US$22 per barrel for the period of the military conflict. Oil prices have recently been at their highest levels since the 1990/1991 Gulf War highs in nominal terms, and have been above US$25 per barrel since June 2002. * Oil prices have been deflated using the US GDP deflator in 2002 dollars. despite increased efficiency in the use of oil and increased substitution towards other sources of energy over recent decades, total world oil demand has been further boosted recently by colder than normal weather in North America and Asia, a sharp increase in Chinese imports, and a decline in Japanese nuclear energy output.Ĭhart 1: Oil prices, West Texas intermediate crude (daily)*.world inventory levels have declined considerably with US commercial inventories now at their lowest levels since 1975 and.OPEC oil production (and supply) have been affected by disruptions to supply from Venezuela. ![]() the uncertainty associated with possible oil supply disruptions in Iraq (Iraq has the second largest proven oil reserves) has resulted in a 'premium' estimated to be between US$4-US$8 per barrel being factored into recent market prices.In the period since then, a number of factors have contributed to oil prices rising to their highest level since the Persian Gulf War in the early 1990s: The decision by the Organisation of Petroleum Exporting Countries (OPEC) 2 to cut crude oil exports and signs of a more robust global recovery contributed to oil prices quickly returning to pre-September 11 levels in early 2002. In the months following the terrorist attacks of 11 September 2001, oil prices (West Texas Intermediate) declined to a 2 year low of US$17.50 per barrel due to market concerns regarding a possible slowdown in the United States (US) and the global economy. This article reviews developments that have been affecting oil prices and the potential implications of higher oil prices for the global economy. Oil prices have risen substantially over recent months, driven by underlying demand and supply imbalances, short-term supply constraints in Venezuela and heightened geopolitical uncertainties.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |