Bask the Low Price of Oil

3(http://www.businessinsider.com/oil-prices-brutal-summer-2014-8)

The oil price may be one of the hottest topics recently. The price kept decreasing from the midpoint of 2014 with an unbelievable speed. I remembered many of my friends even took the pictures of the price tags in oil stations on their facebooks. I was shocked by the amazing low price of oil, which has been compared with the value of gold in these years. Yet, what factors in the background are the causes of this price dropping? Will this trend continues for a long period? It is not realistic to grab the whole picture of the issue so I just learn this price changes from some main perspectives.

The rigid relationship between Russia and other western countries, especially with other European countries, was definitely a major contribution for the dramatically dropped oil price. Russia is constantly one of the biggest country which export energy, including oil, to the world. The income of the oil accounts for a huge part of its GDP. This time, the dropped price could be perceived as a retaliation from other countries who were not content with Russia’s attitude towards Ukraine. Crimea is a sensitive place and the possession of it is related to politics, army, and trade for many countries. It is almost impossible to reach a surefire decision to make two sides both absolutely satisfied. Moreover, the tough attitude of Russian government always made other countries unpleasant. This price decreasing is a little punch by other countries to this big country.

The whole sluggish global economic environment is also a significant role for the dropping price of the oil. Though America has commenced its resurgence after the financial crisis in 2008, economy in US is still not a totally optimistic circumstance. Most areas of Europe have not been recovered from the recession. Some European countries are still suffered from the magnificent pressure of debt. That means two main economic entity are in a “dormitory period”. Furthermore, as the most quickly developed country, China also lowered its pace. The whole languid economy cause less demand of oil, which pulled down the price.

Interestingly, many issues related to the oil price came into people’s view subsequently. Many corporations discovered this price decreasing of oil as a fortune opportunity to make tremendous profit. “According to shipbrokers and analysts, major traders including Vitol SA, Gunvor SA, Trafigura Beheer BV and Koch Supply & Trading Co. Ltd have chartered supertankers capable of storing a combined total of more than 30 million barrels of oil—many of them in the past few weeks. Vitol, Gunvor and Trafigura declined to comment. Koch didn’t respond to requests for comment.”(http://www.wsj.com/articles/worlds-largest-traders-use-offshore-supertankers-to-store-oil-1421689744?mod=trending_now_1)When I saw this new I unconsciously said “Oh my god!” It seems like a very simple trick here to earn billions of money. Buying the oil when the price is low and sell it when the price become higher again. It is even a little stupid to use that kind of strategy as the presents of such tycoons like Vitol. It seems everyone can be a millionaire if we are in the position. But wait! How could we know the oil price will come back higher but continues slumping?

Above all, the whole economy of the world is still on the way be recovered. Recessions are often followed by flourish. Thus, there may be a surge of development in the next few years. What’s more, both Russia and other countries do not want to keep a rigid relationship with each other for so long. Without doubt, retaliation will hurt both sides from the long term view. Hence, let’s drive cars more often now and enjoy the low price of oil price for these days.

Leave a Reply