Could The Drop In The Price Of Oil Be Due To Political Reasons?
Aside from the abundant supply of oil in the market, there are speculations that the oil prices have fallen below the $100 per barrel mark due to political reasons.
There are rumors that in September, the US secretary of state John Kerry struck a deal with King Abdullah of Saudi Arabia to sell crude below the prevailing market price at that time to make Russia and Iraq “easier to deal with” as both nations are heavily dependent on oil exports.
The US purportedly wants Russia to back off in Eastern Ukraine. With Saudi Arabia flooding the market with cheap crude oil, Russia is expected to suffer, because 70% of the nation’s exports are made up of oil and gas. With the US becoming a net producer of oil, it is now less vulnerable to global oil shocks.
But then, observers see the flooding of crude oil in the market by Saudi Arabia as also having a negative effect on the US Shale industry which needs the price of oil to remain in the $100 per barrel price to remain competitive.
Any thoughts on this?
Terry Smeader
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Tags: Oil, price, Saudi Arabia
