What are some causes for low global oil prices?

Expert Solution

1) The first reason for low global oil prices is the strong of U.S dollar. A dollar is the 12 year high against Euro which leads to appreiciation in the U.S dollar index and reduction in oil price. whenever the U.S dollar becomes strong, the value of other commodities decline because global commodities value are defines in U.S dollar and when U.S dollar appriciate , global commodies value declines.

2) The second reason is the formation of OPEC. after many oil company become a CARTEL known as OPEC. they are unwilling to stabilize the market . The price of crude oil decrease by 50% since the OPEC decided to cut its production.

3) OVer supply of Crude oil in the global market is the another reason for the low global oil price. the mechanism of supply and oil work here, that is when supply is large, price falls.

4) Declining demand. - while the supply is increased in global market , there is decline in the demand for the oil which drives the oil price falls.

Rahul Sunny answered 2 years ago

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