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Oil Blues - ASHARQ AL-AWSAT English Archive
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Oil prices have continued to fall for some time and now, it seems that the continuous bubble of increasing oil prices was destined to pop. Perhaps the most projected direct question regarding economics that requires thorough examination is: was the well-known theory, associated with China and India’s limitless consumption of oil, incorrect and exaggerated? Were production and pricing projects based on a different reality?

These hypotheses are currently being researched by petroleum companies, related ministries and specialized research companies that deal with this pivotal commodity. These suppositions are not the only issues that come to mind as there is also the reconsideration of the role of oil in the political arena in light of a changing reality and the domination of a single magnate. However, the oil commodity itself has been mixed up with violent political unrest and certain unaccepted figures and regimes have emerged to the United States such as President Hugo Chavez of Venezuela, an effective oil-producing country, and of course, Iran’s president, Mahmoud Ahmadinejad. In addition, we cannot overlook the tumultuous and increasingly complicating situation in Iraq, which is hindering the country’s opportunity to be an efficient and productive oil-producer.

All of the above could complicate matters further and intensify the crisis especially concerning oil prices, however this has not been the case, in fact the complete opposite has occurred. There have been complex talks on the conclusion of a major oil presentation that a new role awaits the commodity. Major oil companies are experiencing a critical stage of repositioning themselves as energy companies and not only oil companies. America, the largest and most important oil consumer seeks to expand its storage and refinement capabilities and to allow itself and its companies to compete to search for oil in America itself. Therefore, and with the most important symbol of American administration coming from an oil background, this confirms that a new oil climate has been formed and that high barrel prices are a thing of the past. Furthermore, there is the interest of central banks around the world in decreased oil prices as this keeps the spirit of inflation at bay.

However, history has indicated that autumn is always a season for low oil prices after the standard high consumption of the summer as a result of traveling and before winter which also witnesses high rates of consumption as a result of heating. What may also be considered a factor of low oil prices is the lack of intensification regarding Iran and the complex nuclear file and the fact that there have been no international sanctions so far, in addition to the relative peacefulness of this year’s hurricane season that passed with minimum damages.

All these factors emphasize that oil as a commodity is being reborn and could reshuffle the cards for oil producers and consumers in a new and different manner.

Hussein Shobokshi

Hussein Shobokshi

Hussein Shobokshi is a businessman and prominent columnist. Mr. Shobokshi hosts the weekly current affairs program Al-Takreer on Al-Arabiya, and in 1995 he was chosen as one of the "Global Leaders for Tomorrow" by the World Economic Forum. He received his BA in Political Science and Management from the University of Tulsa.

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