Crude oil price has capped its longest northward rally in over two years as Brent crude oil was seen trading a little under $127 per barrel. What next is the question and there seems to be no definitive answer to that as the opinions are divided amongst the global experts. There seems to be consensus on one thing though, that the oil prices would not go back to double figures in 2012. Although, the Greek debt crisis has gone from bad to worse, it has not been enough to offset the factors that have madly driven the oil price rally of late. Global economic growth is said to be recovering more rapidly than was expected earlier, which is likely to put upward pressure on oil demand and price. Piling pressure on oil demand are the improving economic indicators of the two economic power houses, US and China as both have reported impressive numbers. The supply situation is tight and the OPEC has not yet decided to up the ante. Experts opine that OPEC would rather wait till the oil price reaches $150/bbl barrier before making any decision on increasing the oil production. There is nothing of greater significance than the development in Iran when it comes to the oil price future. The market seems to be incorporating the worst fears that could realise should Iran be attacked, which cannot be ruled out given how the situation is unfolding at the moment. Although, the major buyers have time and again stressed that they would still do without Iranian oil, it is not enough to keep the traders to incorporate a pre-war premium on oil price. "150 dollars a barrel now seems not too far", remarked JP Morgan in its latest report on oil outlook. Investors have also been trading cautiously as chances of the rally toe to extend further appear realistic. .Predicting oil price has never been easy but EIA has done a good job in this regard. The EIA expects the oil price to average near $130bbl in 2012, an increase of 10 percent from their previous outlook - tells enough about the gravity of the situation. For Pakistan, the implications would be dangerous. Pakistan can only hope and pray that the oil price does not come near the 2008-highs as it would be disastrous, especially in an election year, where economic rationale is often ignored in making decisions.
Comments
Comments are closed for this article.