The
fall in oil prices in the midst of violent clashes in Iraq, hightened
tensions between the West and Russia and sanctions against Iran has brought
about drastic changes.
However,
the rising supplies of crude in North America and the slowing demand have led
to a decline in prices, a move indicative of how the shale oil boom has
benefitted Washington and its Western allies both politically and economically.
Russia
and Iran are dependent on oil sales and are currently experiencing budget
shortages, which has affected their position in negotiations concerning
Ukrainian sovereignty or the Iranian nuclear deal.
Increasing
oil production from the US and Canada have helped provide a buffer against
threats of supply disruptions from Russia or the Middle East.
Russian
currency has declined drastically against the dollar as its economy is
restrained by sanctions from US and EU. These sanctions have forced Russia to
shell more money for imports.
Oil
production in the United States has increased tremendously. US continues to ban
export of crude and has forced barrels from West Africa and the Middle East to
look for new markets.
Lower
oil prices will benefit US energy firms, while the consumers will gain from
spending less the pump.
On
the other hand lower oil prices will affect Iran's economy as well as its crude
sales. Analysts have also stated that despite having captured oil fields in
Syria and Iraq, Iran will be affected by lower oil rates as they will have to
discount the black market sales that provide funds for the militant group.
As
far as Saudi Arabia is concerned, lower oil prices may lead to short-term
budget shortages.
Experts
suggested that a price drop may not spur action from OPEC members unless crude
falls below $85 per barrel.
For
the time being, the surge in US oil production combined with poor demand has
forced traders to store additional barrels as they wait for prices to improve.
The blog “Declining oil prices benefits the West” contains is a good set of information on oil prices.
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