One thing we have learnt this week-oil prices still high

Why are oil prices still high?  A few weeks ago I wrote about political tensions in the middle east affecting oil prices.  I wrote in conclusion

However, it seems that the current high oil price is partly due to these geopolitical factors and this will continue.

Over the last few weeks we have seen a rapprochement between the US and Iran with UK and Iran in the early stages of reopening embassies.  At the same time the bombing of Syria has vanished with the chemical weapons destruction agreement and there is the prospect of talks between the Palestinians and Israelis.  There is still trouble in Iraq and Libya but generally the tensions have reduced.  The oil price has not dropped- in fact its on a gentle upwards trend.  So it seems there is little geopolitical element to the high oil price.  This means there must be more geological and demand elements to it.  With the world economy picking up demand will be rising.  We have some missionary friends visiting from India.  Demand for oil is soaring there as people buy cars and scooters. At the same time many analysts think supply is tight.  In the row over rising energy prices in the UK yesterday, one analyst suggested whilst most of the increase up to now had been due to gas prices in the future it would be renewables costs.  This seemed slightly naive with the suggestion that gas prices would move up any more.  With gas prices linked to the oil price this seems unlikely.

Neil

This entry was posted in One thing we have learnt this week. Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>