Sources:
http://news.bbc.co.uk/2/hi/business/7048600.stm
http://en.wikipedia.org/wiki/OPEC
http://www.eia.doe.gov/emeu/cabs/topworldtables1_2.htm
http://www.jubileeinitiative.org/RiggedOil$.html
http://www.reuters.com/article/reutersEdge/idUSL0132223020071101
1. Geopolitical factors:
These are causing uncertainty in the market and helping to push prices up. Such as fears about possible Turkey-Iraq conflict. This conflict could threaten oil output in wider region - Iran, Iraq, Kuwait and Saudi Arabia. These countries produce about 20% of world oil supply and about 50% of OPEC supply. OPEC accounts for 66% of the world's oil reserves, and about 40% of the world's oil production.
2. The weak $:
This makes it cheaper for importers to buy dollar-denominated oil supplies, thereby increasing demand for oil. Although biggest oil importers are countries that have had no benefit from a weaker $ - countries such as US, Japan and China. Still, the $ has gone down against currencies that control about 25% of the imports of top-15 oil importing countries
3. Growing demand from India and China:
India and China have about 15% share of the imports of the top-15 oil importers. Moreover, the oil demand from these countries is growing by double digits every year!
4. Financial speculation:
Investors take bets on future oil prices by oil futures. Earlier this year, these speculators were long on oil. As the price of oil has increased above $90, the investors that sold the options to these speculators are scrambling to cover their positions. This has boosted demand as well.
Thus, it is not just physical demand/supply but also financial demand/supply that influences the markets prices of oil.
These are causing uncertainty in the market and helping to push prices up. Such as fears about possible Turkey-Iraq conflict. This conflict could threaten oil output in wider region - Iran, Iraq, Kuwait and Saudi Arabia. These countries produce about 20% of world oil supply and about 50% of OPEC supply. OPEC accounts for 66% of the world's oil reserves, and about 40% of the world's oil production.
2. The weak $:
This makes it cheaper for importers to buy dollar-denominated oil supplies, thereby increasing demand for oil. Although biggest oil importers are countries that have had no benefit from a weaker $ - countries such as US, Japan and China. Still, the $ has gone down against currencies that control about 25% of the imports of top-15 oil importing countries
3. Growing demand from India and China:
India and China have about 15% share of the imports of the top-15 oil importers. Moreover, the oil demand from these countries is growing by double digits every year!
4. Financial speculation:
Investors take bets on future oil prices by oil futures. Earlier this year, these speculators were long on oil. As the price of oil has increased above $90, the investors that sold the options to these speculators are scrambling to cover their positions. This has boosted demand as well.
Thus, it is not just physical demand/supply but also financial demand/supply that influences the markets prices of oil.
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