The oil price is partly determined by actual supply and demand, and partly by expectation. Demand for energy is closely related to economic activity. It also spikes in the winter in the northern hemisphere, and during summers in countries which use air conditioning. Supply can be affected by weather (which prevents tankers loading) and
by geopolitical upsets.

Four things are now affecting the picture.

1. Demand is low because of weak economic activity, increased efficiency, and a growing switch away from oil to other fuels.

2. Turmoil in Iraq and Libya—two big oil producers with nearly 4m barrels a day combined—has not affected their output. The market is more sanguine about geopolitical risk.


3. America has become the world’s largest oil producer. Though it does not export crude oil, it now imports much less, creating a lot of spare supply.

4. The Saudis and their Gulf allies have
decided not to sacrifice their own market share to restore the price. They could curb production sharply, but the main benefits would go to countries they detest such as Iran and Russia. Saudi Arabia can tolerate lower oil prices quite easily. It has $900 billion in reserves. Its own oil costs very little (around $5-6 per barrel) to get out of the ground.

But the greatest pain is in countries where the regimes are dependent on a high oil price to pay for costly foreign adventures and expensive social programmes these include Nigeria.

Okay sir... Next?

complete subsidy removal after 2015 elections. Its gonna be Hard Timez for 9ja

This is your reason, CNN:


[i]McCain also (literally) laughed off the notion that Obama's actions are responsible for crippling the Russian economy, which is nose diving into a recession.

"We should be thanking the Saudis who have allowed the value of a barrel of oil to go to the point where it's affecting dramatically Vladimir Putin's economy," Putin said. "It has nothing to do with any action taken by the President of the United States."[ /i]