It is always said that “Knowledge is something that you can get into, but little knowledge is always dangerous”.
So, with this thought in mind let us explore some interesting facts about rising oil prices that one should know:
- Oil is Very Important but Sometimes it is Horrifically Important
For the world economy, Oil is the lifeline of the development. With no Oil reserves like OPEC etc. the demand for Oil will increase rapidly but supply would fall and therefore, the oil prices rise to a much greater extent. Oil is in fact directly responsible for 1/3rd of the humanity primary energy supply with an over half statistics if natural gas is included significantly.
- Iran & Consequences:
The clear reason about rising oil prices is the Iran crisis. As long as there is a pressure in the Middle East, the chances of increase in the price of oil have become more expanded and fluctuating as well. Iran basically produces more than 4.2 million barrels per day and consumes more than 1.8 million barrels per day. Therefore only 2.4 million barrels a day are left with Iran to export to other countries including India. And, out of this statistics about 2,156,000 is basically reported by the EIA as the strong exports of crude oil and residuals are used a refined products.
The top exporters of Iran are China, Japan and India and rest the other countries. Only about 200,000 barrels is being exported to these three nations and this is the main reason behind rising oil prices.
This shows that demand for oil is more and more but supply is less that causes the petroleum companies to hike the oil prices.
- Low Interest Rates Indirectly affect the oil prices
The major fact for rising oil prices can be the lowering of interest rates because if alternative forms of investments do not provide the reasonable yields then, these interest may affect oil prices to a much greater extent. Taking an example, say prices are rising upwards, then there may be premium for holding oil off the markets and if the interest rates are actually low, then there would be an upward push in the oil prices.
- Rising Demand of New Vehicles with Advanced Technologies
In India, most of the people travel by their own vehicles these days. The vehicles are equipped with more and more technical features that are moving towards the roads of automation day by day causing the possible chances of low mileage for the vehicles that leads to more demand or petrol and diesel ultimately leading to rise in oil prices.
- The Tightening of Global Monetary Environment is a major reason
The rise in the crude oil prices is a significant result of the simulative monetary environment that has been created by the central banks to boost up the global economies after the major financial crisis. The Money Printing cycle increases every year leading to a heavy impact in rising oil prices.
These are some unknown and interesting facts that you must read to know more about rising oil prices at glance.