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Performance of Crude oil Prices

22 Nov 2019

Power and Energy are two essential inputs for economic development and improving the quality of life in India. Development of conventional forms of energy for meeting the growing energy needs of society at a reasonable cost is the responsibility of the Government.

To add on to this Iran has discovered an oilfield containing around 53 billion barrels of oil in the southern region. This discovery has proved to be a boosting effect as the OPEC member struggles to overcome the effects of sanctions on its energy sector. Iran ranks at the fourth position in oil reserves worldwide. However, the country’s exports of crude have plunged since the US re-imposed sanctions in 2018.

Oil prices fell in the last week up to 1% due to the concerns over the prospects of a trade deal between the United States and China, however, worries about the oversupply of crude also weighed in the market. Keeping in view the present conditions, crude oil is now on a roller - coaster ride.

Crude oil prices are being under pressure due to the uncertainties around the 16-month long trade war between US and China. It is expected that world crude oil prices will average in the last face of 2019 and beginning of 2020. It has become difficult to predict the oil prices as if traders showed a higher demand in summer and once the demand peaked, prices started to drop down as the winter begins.

As the trade war between the U.S. and China gets fierce, crude oil seems to be experiencing the pinch. Since China has also came up with a stringent tariff plan against the U.S. imported goods, the tariff war is likely to become more intense in the coming months. Consequently, the markets foresee a potential economic slowdown that might dawn upon the Chinese market in the near term. Given that China is one of the key consumers of global oil, a downturn in its economy could hamper its demand for crude oil.

To conclude, Crude oil prices are expected to be on a very volatile condition in the coming months. The behaviour of oil prices will have a major effect as it has been associated with number of factors.  As stated above, different incidents are creating different impact in the oil market. So, it has become a difficult situation to accurately predict the trend of oil prices in near future.

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