In the 1990s, Russia's industry was virtually destroyed, and oil became the main source of budget revenue for the country. Specialists have long called this situation the “oil needle”, since dependence on the sale of raw materials makes us vulnerable. In recent years, we all have felt this well. Problems in the world economy and politics have led to a drop in the cost of oil, and each of us asks the question: when will oil rise in price?
How the market is formed
First of all, let's answer the question: what do fuel prices depend on? The cost of any product depends on supply and demand. If the product is required in small quantities, but is produced in large quantities, the price for it will inevitably fall - it is necessary to somehow sell the goods. Oil is used in production, so the demand for it depends on the general state of the world economy. In recent years, there has been not just a stop, but a certain drop in the level of industry, less fuel is required, and the supply has not just not fallen - it has grown due to the policy of Saudi Arabia. Supply exceeds demand, so the price has fallen. It would seem that the answer to the question of when oil will rise in price is very simple: when production will increase. But there are other factors.
Covert Games
The cost of hydrocarbons is largely dependent on policy. It is no secret to anyone that the West has always looked with envy at the vast resources of Russia, and work has long been underway to weaken the country so that it becomes possible to cut off a piece of this pie. The so-called “oil needle” is the weakest point in Russia, so the West decided to hit the hydrocarbon market. How did the oil drop begin? Previously, the amount of its production and prices were regulated by a special organization - OPEC. However, a couple of years ago the system “broke down”. Saudi Arabia and the United States sharply increased production, demand rose. The goal is simple - to capture the market with dumping. Around the same period, problems began with the economies of China and Ukraine, which led to a drop in demand. Now the answer to the question of when oil will rise in price has expanded:
- When the countries included in OPEC agree among themselves, realizing that the fall in prices for raw materials has hit everyone.
- When the world economy will grow (here the hope is primarily in China).
Stock players
Oil prices are also affected by expectations. All raw materials go through the stock exchange, and experts say that pricing is very subjective. If a rumor suddenly passes that Saudi Arabia will decide to reduce production, and if market players believe this, then they will begin to massively buy oil in the hope of higher prices. Due to such artificially created demand, the cost will really begin to grow. But if the players are sure that the situation will not improve, then they will prefer not to take risks and reduce the purchase of raw materials. As you can see, there are too many “ifs” to say when oil will rise in price, the price forecast for which should take into account a huge number of factors.
New discoveries
Science also cannot say whether oil will rise in price. Scientists have not even come to a consensus on what its reserves are on the planet! At the same time, more and more news comes about the development of alternative energy: wind and solar energy are actively used, technologies have been developed that allow the production of gasoline from vegetable oil, and electricity from decaying waste. While the level of development of such technologies is low, they are able to provide no more than 20-30% of the global energy demand, but scientific research does not stop. When scientists make a breakthrough, and whether they make it, it is impossible to say.
We must not forget about nuclear energy. In 2010, she surrendered her position strongly, however, in large countries, the construction of nuclear power plants is constantly underway, which can provide a lot of cheap energy. This process is not yet very active, since atomic energy is very dangerous, but work is underway to find the least risky solutions.
What to expect from the presidents
You can find a lot of expert opinions, but in reality no one can say exactly when the oil will go up. Many claimed that in 2016 its price would rise to $ 100, or even $ 150, but everything turned out differently. World politics today is simply unpredictable. A simple example: when sanctions were introduced against Russia, the same experts claimed that the economy of our country would collapse. But it turned out differently: Europe suffered much more, as its export level fell. For Russia, sanctions were the impetus for the development of the economy. Today we are witnessing curious changes in the foreign and domestic policies of many countries. In the USA and Europe, in fact, there is a struggle between two courses: for cooperation with Russia and for confrontation with it. From the outcome of this struggle, it will become clear when oil rises in price.
Eternal problems of the Middle East
In the news on federal channels, one can rarely hear about the state of affairs in Iran, which is rather strange, because it also depends on its economy when oil prices rise. The embargo has recently been lifted from this country, that is, its oil can now flood into the market. Of course, the restoration of industry will take some time, plus it is not clear what position Iran will take. On the other hand, the situation in Syria is slowly but surely improving. As you know, terrorists are actively trading in raw materials, significantly lowering their prices, since this activity is illegal. Provided that Iran decides to support Russia, and the banned ISIS organization is destroyed, it can be said that the time when oil will go up to $ 80 is just around the corner.
Russian politics
It should be noted that many Western attempts to weaken Russia crashed due to the competent behavior of the Russian government. In the context of falling commodity prices, we found new markets, significantly improved relations with the countries of the East and with some, if not the most important, European states. The coalition of Asian countries, where Russia has entered, is slowly but surely strengthening, and perhaps in the near future it will be able to confront the West. There are also changes in the domestic politics of our country, but so far they are less. There is significant growth in agriculture, work is underway to support entrepreneurship, but significant investments in heavy industry and oil refining, which could consume large amounts of raw materials, have not yet been observed. Nevertheless, in general, the Russian economy is becoming more stable, which will lead, if not to an increase in hydrocarbon prices, then at least to a decrease in dependence on them.
Let's try to make a forecast
What needs to be done to make oil rise in price? Yes, just continue the course laid today. Perhaps we can say that if Western countries do not make any unexpected suicidal decisions, then the price of oil will rise, albeit not at a high pace. Judge for yourself:
- The Saudi economy has been hit hard by price dumping.
- Iran and Syria are likely to be on the side of Russia, as previously the West led them to decline.
- European countries are looking for ways to overcome the crisis and build up the economy.
- China has always been famous for its “economic miracles,” plus it lifted restrictions on the birth of children. It can be expected that if population growth does not raise the country's economy, then at least it will not let it fall even lower.
- Shale oil production in the USA has always been a dubious enterprise, and today we see how its level is falling.
- Asian countries have begun active cooperation and are looking for settlement options without the use of the dollar.
- In the Russian economy, there is a reorientation, although still weak, towards light industry and agriculture.
- Alternative energy is still unable to fully meet the needs of world industry.
And yet, perhaps, one should think not about what to do to make oil rise in price, but about how to get rid of the “oil needle”. Whatever the forecasts and prices for raw materials, dependence on them will always make our economy weak and unstable, therefore the main thing today is not oil, but the comprehensive development of industry and agriculture.