If 2011 was a remarkable year for oil exporters, 2012 was a Wonderland. Last year, for the first time, the oil price averaged more than US$100 per barrel of Brent crude. This year, the price has been even higher - $111.90. As Lewis Carroll's Alice would have observed, it was curiouser and curiouser that such high prices persisted despite a weak global economy and rising stocks.
Reflecting on the high oil prices from 2003 until now reveals three key drivers. Developing Asian countries, above all China, were undergoing economic booms and fast-rising demand. Non-Opec production was weak. And therefore Opec, enjoying tight markets, was able to maintain discipline - making sharp production cuts to revive prices after the 2008 economic crash.
Over the past decade, Saudi Arabia, the UAE and Kuwait made only measured increases in production while potential rivals - Iran, Iraq, Venezuela, Libya and Nigeria - struggled.
No comments:
Post a Comment