Implications Falling Oil Prices
For some months now, the prices of oil have considerably being going down which has also led to a lot of negative implications for countries who mostly specialise in the exportation of oil. This situation means countries that simply import oil from other countries won’t have to pay much in order to get their plants and machines up and running. The prices of oil have always been a determining factor for both the exporting and importing nations. For the exporting nation, any fall in prices of oil simply means a drastic fall in their export revenue and for an importing nation it signifies a lot of revenue saved from the importation of oil.
Oil prices stabilized between 2010 and 2014 during which a barrel was sold at about $110. However, recent oil prices indicate a very worrying trend especially for the exporters of oil as the price per barrel is now less than half of what it was being sold between 2010 and 2014. Brent crude oil now has a barrel being sold at $30 which has not been the case for over 7 years now. The last time that Brent crude oil attained such a low price per barrel was in the year 2009. For the past two months, US crude had been hovering around $30 per barrel but just at the beginning this week it was able to see some positive developments reaching $37 per barrel.
Whenever oil prices go up or down, there are always some countries that will benefit whilst others also suffer. In the instance of oil prices going down, a country like Russia, which has more than two-thirds of its foreign earnings from the exportation of oil, stands to lose so much whilst a country that only imports oil benefits from the price falls. Although recent oil prices are nothing encouraging, Russia has made it a point to see to it that it keeps on supplying its fair share of oil to the international market since in such a situation the best option would have been to cut supply and shore up oil prices.
It however remains to be seen if latest developments are anything to go by. Presently, oil has for the first time in two months recorded some increases. Although the prices of oil are right now volatile, recent upward trend in its price can bring some form of relief.