World Petroleum Prices
World Petroleum Prices are affected by a variety of reasons. Whichever you look at it the obvious factors will have the economics of demand and supply and the effect it has on World Petroleum Prices. Most of the countries in the world are not able to meet their own demand with their local production and hence need to import petroleum. Some of the developed countries require increasing quantities of petroleum and there is a corresponding shortage in the world market as supply is limited to the existing oil wells. Even the discovery of new wells has not shown any major improvement in the supply and the world demand continues to rise.
A factor which seems to impact World Petroleum Prices is OPEC (Organization of Petroleum Exporting Countries). This organization consists of member countries like Iran, Iraq, Ecuador, Saudi Arabia, Venezuela, UAE, Algeria, Indonesia, Libya, Kuwait, Qatar and Nigeria. These oil producing countries account for 46% of the world’s petroleum production, and they form an alliance to regulate the supply. This alliance was formed so that they would not lose out on the price due to competition. They also saw that the prices were not too high as that would encourage certain countries to drill in new fields which are an expensive enterprise. Although the policies of OPEC contribute to a certain extent to the World Petroleum Prices they cannot completely control the prices due to the trading of petroleum on the futures markets of the world.
Futures trading in petroleum have been known to be a major factor in determining World Petroleum Prices. In many countries particularly the US the trading in New York Mercantile Exchange has shown how the prices of oil are driven in the country.
Many countries are realizing the cost involved in drilling for new oil and are making optimum use of Used Petroleum Equipment. They are also employing better technology which will cut the cost of production and keep the output cost effective. These developments are also affecting the World Petroleum Prices, as more countries are increasingly involved in prospecting and drilling for oil with these new techniques. Other technologies which reduce the dependence on oil are also being implemented by many countries. This will bring down the overall pressure of demand for petroleum and accordingly affect the World Petroleum Prices.
Sudden spurt in World Petroleum Prices are also seen when there is a crisis in any of the major oil producing countries. The usual crisis is war, and this has caused many fluctuations in the World Petroleum Prices.
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