The global price of oil has fallen sharply since June, when oil prices hit $115 a barrel. Now, only four months later, the price for a barrel of oil has dropped to $85, and it could keep dropping. Global supply of oil has increased in recent years, especially in countries outside OPEC, which is one reason for the drop in prices. A more concerning reason that could be adding to the lower prices is a global drop in demand, due to slowing economies, which could signal another global economic downturn. Whatever the reasons, the suddenly low oil prices could have huge impacts around the globe, positively or negatively affecting economies that rely on the production or use of oil.
globalEDGE Blog - By Tag: oil
Much of the talk surrounding biofuels in the past has centered on corn, wheat, soybeans, and sugarcane, which are known as first generation biofuels. These food crops were seen by many as a way to become more energy independent, as they could be processed to create ethanol fuel that in turn could replace our dependence on oil. The excitement of this prospect led many countries, such as the United States, to implement mandates requiring specific amounts of ethanol to be mixed with gasoline. These countries hoped that ethanol could help by lessening the impact of oil prices on the economy and by saving the environment from the increasing use of oil.
Within the past week, the Congress of Mexico has approved new legislation that will allow the country's energy industry to award contracts to private oil companies. As a result of these new reforms, not only will the state-owned oil giant Pemex lose its monopoly over the country's oil sector that it's held since 1938, but foreign oil firms will also be able to enter the lucrative Mexican oil market.
As Brazil is busy finishing the last construction for the 2014 World Cup, Qatar, the host of the 2022 World Cup, has started its infrastructure improvement plan to welcome its guests from all over the world. This preparation has really brought Qatar into the eyes of investors with high expectations for economic gains. Qatar is not alone, as we see millions of “host money” from foreign investors has pushed the UAE’s stock market also to a new high. This blog will give you the overviews of Qatar’s and the UAE’s economy in the recent years and will explain the reason why Qatar and the UAE have experienced growth in foreign investment.
Within the next two decades, Brazil is expected to triple oil production and move from the 12th top oil producer to the 6th according to the 2013 World Energy Outlook Report generated by the International Energy Agency (IEA). The predicted success of Brazil’s energy industry can be attributed to the auctioning of the Libra oil field which holds 8 to 12 billion barrels of recoverable oil. With a supply of oil this substantial, the world’s crude oil demand could be fulfilled for up to 9 weeks alone by Libra.
In a recent study done by Chatham House, a world-leading source of independent analysis based out of London, it was found that large amounts of Nigerian crude oil was being stolen. The research discovered that at least 100,000 barrels of oil per day, or around 5% of total output, were stolen in the first quarter of 2013. The extensive network of exported stolen oil includes thieves, financial centers, commodities traders, politicians, and international trade.
Chinese oil companies that have held exclusive oil-extraction privileges for nearly a decade in Western Africa are now facing resistance from governments who claim that the Chinese are "gouging, polluting, or hogging valuable tracts." In Niger, private auditors have recently uncovered large costs and impractical charges made by the China National Petroleum Corporation, which has added another argument for the revisions of trade agreements that have already saved Niger tens of millions of dollars from the Chinese. In neighboring Chad, the government recently shut down Chinese oil operations after discovering immense amounts of environmental pollution within their borders. Gabon has also joined in the fight against the Chinese petroleum corporation, which surprised the oil industry by withdrawing a permit from another Chinese state-owned company, Sinopec, and giving it instead to a newly created national oil company.
Nigeria’s economy has been faltering due to struggles in the oil industry. The country is the largest oil producer in Africa, outputting around two million barrels per day and consuming just 267,000 barrels per day. Interestingly enough, Nigeria has a strong dependence on fuel imports. Their struggles stem from the fact that they simply don’t have enough refineries, and the ones that exist are not maintained well enough to work to their full capabilities. The industry has been slipping into turmoil, as industrial scale theft and inefficient fuel subsidy policies have slowed production significantly.
International Energy Agency (IEA) reported on Tuesday that the shale oil recently found in the United States will help meet most of the world's oil demand in the next five years. It is significant to the world market as well as to the U.S. itself because it eliminates the threat of future energy shortage and reshapes the U.S energy market and its relationship with other countries.
Controversies surrounding the Keystone XL pipeline have arisen yet again due to the pipeline rupture that occurred in Arkansas suburbs just last week. Over 12 thousand barrels of heavy crude oil flowed into a residential neighborhood, rendering about 24 families homeless during the evacuation. Even though an around-the-clock cleanup began last Saturday, what will this mean for Pegasus pipeline, run by Exxon Mobil? And also, how will the leak affect public opinion regarding the implementation of the Keystone XL pipeline?
While Cyprus is experiencing economic woes and Turkey is finding its way out of a huge European debt crisis, the energy relationship between Cyprus and Turkey regarding gas and oil is causing stress for both countries. On Wednesday, Turkey announced the suspension of energy projects with Italian giant ENI because the company expanded the exploration for oil and gas to Cyprus. ENI’s decision on the project expansion in Cyprus has created hope of economic recovery Cyprus but it infuriated Turkey since the project would cut down the energy plan in Turkey.
What seemed unthinkable just a half decade ago is now reality. The United States has surpassed Saudi Arabia as the world’s biggest fuel producer. Crude output in the U.S. has hit a 20 year high and has produced the most fuel in the world for the first time since 2002. The United States is producing 11.65 million barrels of liquid fuel a day (which includes crude, refined petroleum products, and biofuels) surpassing the Saudi Arabian output of 11.25 million barrels a day.
The changing global climate has become increasingly more difficult to ignore due to climbing air and water temperatures, rising sea levels, and melting of polar snow and ice. Recent reports have stated that the area of ice in the arctic has never been smaller, which has recently caught the attention of Asian economists. The opening of the Arctic north promises new trade routes, untapped reserves of oil, and an abundance of minerals to discover.
For the past few weeks, Western states have not only imposed sanctions on Iran, but also convinced many Asian countries to do the same. These sanctions are an economically crippling bargaining technique to pressure Iranian officials into discontinuing their uranium enrichment program, which American and European officials claim to be a nuclear weapons program with malicious intent but Iranian officials claim to peaceful and a national right. Furthermore, many financial institutions that interact closely with Iran’s central bank have also been targeted. The assets of Iran’s central bank are currently frozen that are linked to Tehran.
With many concerns and debates regarding climate change, countries around the world are looking for ways to reduce carbon emissions. These carbon emissions happen to be the leading cause of climate change and large coal-burning industries are mostly responsible. One way to reduce these harmful emissions involves a new technology that captures carbon dioxide from the air and pumps it directly underground for permanent storage. This project was operated in Germany, Scotland, and the United States with little success. However, the two largest consumers of carbon dioxide, China and the United States, are investigating a new way to reduce carbon output and are looking toward a surprising industry for this solution.
As the earth’s conventional oil supply continues to diminish, the discovery of new fuel types is becoming as important as ever. The Organization of the Petroleum Exporting Countries (OPEC) has recently released a statement stating that global tight oil reserves could produce as many as 300 billion barrels. Tight oil is another name for shale oil, which is a form of light crude oil found in shale deep below the earth’s surface. Although it will most likely be a decade before big supplies of tight oil are produced, the future production could rival the conventional oil production in Saudi Arabia.
Oil is quite possibly the single most important commodity in the modern world economy. Those countries with abundant sources of the valuable substance are in a strong position to trade with producers around the world who cannot do business without it. CNBC has put together a list of the top fifteen countries in terms of confirmed oil reserves. The ramifications of this list are much greater than they may initially seem.
Everyone has been hearing about it lately. Look at any news site and it will be the top story if not many of the top five stories. Ever since Mohamed Al Bouazizi set himself on fire in December to protest Tunisia’s economic situation, revolution has been spreading across the Middle East. These conflicts are demonstrating how some of the world’s smallest countries can have great effects on the rest of the planet.
Check out these two articles from the New York TImes on the recent opening of oil fields in Iraq. This article from December discusses the second round of bids that happened a few weeks ago. The second article is from last June, which discusses the impact of opening the fields to foreign investment.