We cannot deny that the oil reserves that come from the fossil fuels are extremely valuable. In fact, we can see that those countries which utilize their oil reserves are some of the richest countries in the world. This is because most of the countries all over the world rely on oil for the mobility of vehicles, transportation, and even distribution of goods and services. That’s why sometimes the economy of a particular country greatly relies on oil price! If the oil price is high, most likely, our price of goods will also increase. If it’s down, our goods become more affordable. The oil has become one of the most important commodities on earth and sometimes countries tend to fight for it (like the unfortunate ongoing wars we’ve witnessed in the Middle East).
For years, the oil was and still is dominating our world. Unfortunately, we all know that fossil fuel reserves are limited. It’s a non-renewable energy and we’re only counting the time before we drain it. Aside from that, burning of oil contributes to the expansion of global warming and greenhouse effects. That’s why several environmental organizations are concerned about its usage. Aside from their mission to preserve the oil reserves, they want to tap more on using renewable energy to battle climate change and it seems that they’re going to reap the fruits of their labor since the oil price and demands are now declining, mainly because of the rise of electric vehicles.
Oil Prices Are Expected to Decline Down to $10 Per Barrel
Chief Executive of Longview Economics, Chris Watling, predicted that the oil reserves will continue to plummet over the next six to eight years as the alternative and renewable energy fuels continue to attract investors. Waiting can’t help but say that in the dawn of 2018, the key catalyst for the decline of the oil market would be the Saudi Aramco’s initial public offering (IPO) for the second half of next year. While Waiting didn’t directly imply that the oil prices would go down for the next weeks or months to come, he’s more explaining about its long-term effects not only on the international stock market but on the world too, especially since 70% of oil is primarily used for transportation.
“We forget don’t we? I mean 120 years ago the world didn’t live on oil. Oil hasn’t always driven the global economy… The point is alternative energy in some forms is gathering speed (and) things are changing,” he added.
OPEC still optimistic in terms of oil market rebalancing
Despite the forecast Waiting made, the International Energy Agency (IEA) is still optimistic that it will not put a damper in their hopes of high oil price. They said that they’re closely monitoring the global stock builds, static oil demand, and the rising non-OPEC production that would determine the oil price hike. In the latest monthly report they submitted, they published an optimistic forecast in contrary to Waiting’s predictions. Their data shows optimistic oil price forecast from major oil reservoir OPEC, which argues that the cartel was an evidence of the growing demand of global oil market and rebalancing in response to several years of decreasing prices.
It can be reminded that the oil price collapsed for almost $120 per barrel since June 2014 due to weak demand, in which the strong dollar exchange rate also affected the price. However, according to the graph projected by the international stock market, they predicted that it will move to a curb production along with the other oil-producing nations in 2016. The current trade for oil barrel is around $57.39 since Friday meaning it is up by 2% while the US crude is around $51.50 a barrel, up 1.8 percent.
While the data between two opposite groups seem to negate each other, time will only tell whether we’ll stop being independent of oil. In the meantime, several oil companies all over the world are battling to regain their domination while the environmental organizations are fighting hard to implement green and renewable energy.
Should we go for a more environment-friendly approach? Let us know your thoughts in the comments below…