|
The article explores the current scenario regarding the fall of prices on oil. The prices on oil have again sunk low in October 2011 as a reflection of the unresolved economic crisis in Europe. The riots and strikes in Greece are still going on. The credit ratings of Italy are downgraded. Industry analysts predict that though the Libyan dictator Moammar Gadhafi was killed, there will be little change in the oil dynamics of Libya in the industry.
Libya’s ability to return to its original production status is greatly hampered by the security threat that still exists. Differences between the rebels make a mockery of the attempts to make a coherent interim government. The region is in chaos with no parliament, no constitution and no civil organisations for the society. The military itself stands divided between regional and tribal divisions. Analysts predict that there is a high risk of Libya forming a political and security vacuum.
Libya is desperately trying to revamp its oil production and its efforts may raise the production to some extent. No agreements have been formed despite the EU summit which suggests that whatever solution may be reached, it will be insufficient to resolve current matters completely. Whatever European Union proposes is bound to have some loopholes.
After taking some earlier measures the European Union is now proposing to put a ban on the rating agencies to disclose the revised ratings at a sensitive time. This seems an innovative way to maintain the triple A rating. The scenario around the globe is responsible for the fall in oil prices.
Though Libya has rid itself of a dictator, there is much yet to be done for Libya to stand back on its feet and return to its earlier potential. The quantitative easing done by the IEA was only a temporary resort to soothe the oil price. More constructive and effective measures need to be in place to put a halt to the volatility of prices on oil. The economic problems in the European Union and United States have only adversely affected the oil industry. Fears of a second recession do little to soothe the fears of investors.
Any positive sign in the industry and other markets again slip to their original negative state as news keeps coming in from highly sensitive trouble spots. Contradictory statements by analysts also keeps coming in, as new information is found.
A lot of factors are driving the oil industry currently, some driven natural elements such as the available resources and market while others driven purely by man. It is difficult to truly analyse the factors driving crude prices in such a chaotic scenario. The columnist is an experienced journalist in oil related fields, who regularly writes articles related to oil prices & indexes and crude oil including tips on investment in oil. Please visit oil.com for more details.
Related Articles -
oil price, oil prices, prices on oil,
|
