Oil Prices between Economic Realities and Geopolitical Motives
By Ahmed Mousa Jiyad.
From June to mid-November 2014, oil lost almost one-third its price. Much has been written about this dramatic decline and different thoughts were offered attempting to explain what has been behind such downward movement.
This paper addresses firstly the recent price movement by analysing the linkages that exist between oil prices from their daily trading sessions to their medium term forecast, contending they are closely linked and mutually reinforcing.
The second part attempts to review and assess the main arguments behind the current price deterioration. Three broad arguments are discussed:
- hard economics;
- market share; and,
- geopolitical motives.
The SWOT analyses suggest weak validity of the arguments for market share and geopolitical motives.
In its last part the paper offers brief remarks on the price differentials between Iraqi crudes and Brent and its implication, suggesting further examination of this issue by State Oil Marketing Organization (SOMO) / Ministry of Oil (MoO).