Wednesday, January 13, 2016

Oil Prices Drop Over China Weak Economic Outlook Not Middle-Eastern Crises

Global oil prices are sliding downward primarily due to a weak economic outlook in key commodity consuming countries, such as China, whereas the mounting political tensions in the Middle East are unlikely to boost the demand, experts told Sputnik Wednesday.

On Tuesday, US West Texas Intermediate (WTI) crude futures briefly tumbled below $30 per barrel for the first time since December 2003 amid the investors’ concerns about global overproduction.

"The weak economic outlook in major commodity consuming countries like China, South Korea, etc. will likely place greater downward pressure on prices due to a lack of demand. This lack of demand, in my opinion, will negate any short-term price hikes resulting from rising tensions in the Middle East," Friedbert Pfluger, the director of the European Centre for Energy and Resource Security at King's College, London, stated.

This is why, there was no price increase over the past year despite Iran being excluded from the market and tensions in the Middle East, he outlined.

"The oversupply of the market has mitigated price fluctuations based on political risk factors. Therefore, the structural production and demand factors play a much larger role than volatility would if the market were much tighter," another expert, an energy and Middle East scholar at the University of Oxford, told Sputnik.......


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