In the past six months, oil has continued to drop in price to its lowest level in four years. The drop has everything to do with increased supplies than the normal regional and geopolitical factors that control the resource.
Members of the Organisation of Petroleum Exporting Countries (Opec) met this week in Vienna and wisely decided not to cut production levels to try and influence prices. With winter and increased fuel consumption upon the northern hemisphere, there was rightly little sentiment paid to slowing oil production now. The reality too is that other economic indicators point that there is a threat of economic slowdown in Europe, China’s manufacturing and output levels are not as robust as in the past three years and any Opec-imposed production cuts would only act as a hamper to continued growth.
The Opec decision to monitor supplies and pricing levels will also ensure that western sanctions imposed on Russia for its interference in Ukraine will continue to bite. And for Iran, lower petroleum prices also give added impetus to reach a deal on its nuclear programme to ease the crippling effect of sanctions.
