Oil Price Fall and the Future of Oil - Will Crude become Obsolete in 10 years time?
Regular stocks and commodity market is often affected by demand and supply, when a higher supply and a lower demand leads to a drop in price while a higher demand and a lower supply leads to a rise in price but this isn’t the same for oil. Oil being the world black gold and the most sought out commodity has its price fluctuate on a different level, it is affected by climate, demand and supply, storage, geopolitics and other external factors.
The price of oil was doing relatively well until 2014 when it dipped but started improving and at the end of 2019, the price of oil at $61.14 per barrel and at the beginning of the year 2020, the price of oil started at $61.17 per barrel but as at the time of writing, the price of Brent crude is at $42.70, the price of WTI crude is $37.74 and the OPEC basket is at $37.59. What could have caused this great fall in oil price?
The reduction in oil price in 2020 is as a result of geopolitics and the pandemic. At a point in 2020, the price for a barrel of WTI crude oil went to negative to about -$37.63 which meant that producer were paying buyers to come take oil provided they could keep and preserve it. Before this time, the price of oil started falling due to the OPEC+ misunderstanding between Russia and Saudi Arabia which led to an economic war due to Russia’s refusal to reduce its production of oil in other to keep the price of oil stable. Saudi Arabia decide to lower price and produce more to keep its profit and to retaliate. Although the OPEC+ has come to an agreement but the price of crude oil already went down and it was accompanied by a pandemic which shut down the world’s economy.
Countries like China and India which use up about 30% of the total oil were the first to shut down their economy and with this, the lack of demand for oil and the continuous supply of oil as oil rigs couldn’t be stopped easily led to the fall of the oil price. Also, let us not forget that people are now going into renewable energy to power homes and for offices which means the demand for oil will keep reducing.
My Question
- What do you think will happen to oil in the next 10 years?
- Do you think the government to start looking into other commodities to generate income?
- Do you drive an electric car or a car using fossil fuel, if you are driving a fossil fuel car, do you intend to buy an electric car in 2 years from now?
- Do you use renewable energy?
- Will Crude become Obsolete in 10 years time?
References
- https://www.cbc.ca/news/canada/calgary/opinion-oil-price-storage-capacity-brian-jean-1.5539878
- https://www.macrotrends.net/1369/crude-oil-price-history-chart
- https://en.m.wikipedia.org/wiki/2020_Russia%E2%80%93Saudi_Arabia_oil_price_war
- https://www.google.com/amp/s/www.cnbc.com/amp/2020/04/25/scary-visceral-unprecedented-traders-describe-oils-wild-week-and-fall-to-negative-prices.html
I think China and India are energy-hungry countries...they can reduce the oil demand Lil bit but still they need oil till 2050 because the common man can't afford things like an electric car or electric bike these are new technology and they are quite expensive in any developing nation.
Well oil is done, at least as we know it. Saudi Arabia announced a few years ago about the need to diversify a virtually entirely oil dependent economy.
@tipu curate
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@ojerinde 10 year is very less time but I can say in 2050 you can oil will be a very rare resources as we are using it very fast. Currently oil prices fall is because of meltdown but it will soon be booming.
Despite the hype on electric items, it may still take a long time before we are finally able to get over the use of crude completely.
Ever since the fall of oil price, some advanced countries are now looking for proper solution to eradicate the use of oil due to it's great contribution on global warming. We now have most of them producing more electric cars and solar cars to avoid anything that has to do with fuel combustion.
Even though the use of oil can't be eradicated completely in most part of the world because there will surely be a need for the utilization of oil in some countries.
Thanks for sharing this great post with love from @hardaeborla and I hope you have a great day ahead
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Interesting...
I had not seen until now the possibility that oil could go into disuse in the future. But if it is a possibility. I don't think it's in the short term, not in ten years. Because for renewable energy to become the most widely used, it's still a long way off. There are big interests against that. But it's quite likely.
What limits are the costs of solar energy, electric cars, among other things. What makes even gasoline, say, among other things that are derived from oil will continue to be used.