6

As you can see here, the prices of crude oil dropped from $105 in July to $85 now.

I am guessing this is not just a market fluctuation, rather a trend. The prices were rising till July 2014 and then the decline started.

What is the reason for such a steep fall?

  • A commodity trend is several consecutive years. Oil has both a seasonal demand and an exchange rate component. I could cite a dozen factors that influence month-by-month changes but the price can go up and down quite readily in any 12 month period. – LateralFractal Oct 14 '14 at 16:21
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    The cynic in me says Nov. 4th has a lot to do with the recent price drop. – Ryathal Oct 14 '14 at 20:50
  • @rya another view; opec agreed to drop prices to hurt russia for helping Al as sad or in exchange for usa fighting isis – user4012 Oct 15 '14 at 12:37
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    @san1646 that is election day in the U.S. – Ryathal Oct 15 '14 at 21:00
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    Since they always blame higher oil prices because if trouble in the middle east, I am going to go with peace in the middle east. – user1873 Nov 6 '14 at 14:45
5

Although there are many reasons, here are some reasons I found the most relevant:

  1. Europe and China slowing down
  2. Saudi Arabia trying to inflict losses to Iran and mitigate its influence in the Middle East.
  3. Iran needs at least $130 per barrel price and Russia needs $100 (for oil export to be feasible). So to damage these economies, prices are kept low.
  4. Russia, US producing more oil - North Dakota and West Texas oil fields
  5. Saudi Arabia not reducing production due to fear of losing market share to Iran

I am knownledgeable in international affairs, and things are much deeper than what appears in the media, but some of these might be true.

http://www.npr.org/blogs/parallels/2014/10/16/356178810/as-oil-prices-fall-who-wins-and-who-loses

http://www.economist.com/blogs/graphicdetail/2014/10/daily-chart-7?fsrc=scn/tw/te/bl/dc/blackgolddeficits

2

1- It depend where you live. In the US, the dollar is stronger now that during this past summer. It cost less to import oil from other countries. I know that the US are not importing all the oil they use but this still has an effect.

2- Also, the economic growth is slowing down in major countries like China and Germany (to name only 2). The German economy could face a recession soon if things do not change.

3- The US, and Canada also are producing more oil. Some of this oil come from the states like Dakota. It is considered unconventional oil and it is taking a larger share of the market than before. the oil production of the US could rise in the next year with these new sources of oil. In Canada, we have problems exporting the oil from the tar sands. Either it's a good or bad thing, I'll let you decide but there are problems related to the exportation of Canadian oil and this could also have an impact on prices. We have oil, but we can't transport it. This could create a surplus of the local market but I'm not really sure if it's the case.

1

There are more than one reason for fall in Crude Oil Prices. Some of the reasons are Economical, Political, Technological and Environmental changes.

  1. Europe and China's markets are slowing down and so they are importing less oil.
  2. Iraq, Libya and Syria are in political turmoil, resulting in less production of Crude Oil.
  3. US is producing its own share of Shale Gas from North Dakota and Texas using Hydraulic Fracturing Technology so it has to import less Crude Oil.
  4. Saudi Arabia unwillingness to compromise its market share and also its rivalry with are the reasons behind its production of crude oil to make Iran suffer with heavy losses (by getting out of business).
  5. Russia and Iran have to keep up their revenue and market share so they're selling Oil at low prices.
  6. Due to increase in Global Warming and Environmental Concerns countries are switching for Green, Renewable sources of energies rather than Fossil Fuels.
  • I wish 6. was true, but unfortunately, the cinic in me tells me this plays no role here. Also, 2. would have a tend to increase oil price, not decrease it. – Bregalad Apr 3 '16 at 20:35

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