It seems Germany, not Saudi Arabia, holds the key to oil prices for the next 18 month, Goldman Sachs is not the only crude oil analyst that has let the reality sink to it. This tells that it is more than just the oil market fundamentals that dictate the global crude. Besides market forces, oil prices have a lot to do with global politics. Crude prices spent the beginning of the year rallying high to the fears of US-Iran squabble. And just when investors had braced for a jolt similar to the one in CY08, the omnipresent risk of the eurozone shifted the attention back to the global economy. After rising continuously for more than two months since the start of the year, oil prices relaxed in later months. With Ben Bernankes words on global economic outlook resounding in the background, and new fears abounding the stability of the eurozone, crude prices plummeted to eight month in June. And now with oil prices suddenly jumping up with the news of Spains $125 billion beleaguered banks bailout, there remain no qualms that the policy moves read out global price movements. Obviously pacifying growth and consumption in China, India and US have their share of impact intact. If it were only the volatility in oil producing countries, sky would have been the limit for price hike. Likewise, nothing could make the murky price forecast tricky, had it been the shrinking economic prospects in the consuming countries alone. Now that the two have struck together, the wobbly ride is the fate. It remains difficult to foretell a sustained rebound or a continued easing of oil prices in times to come. The situation remains on tenterhooks over the eurozone. All eyes are now on OPECs fifth international seminar where it will reveal its output level. At the moment supply risks are struck out due to over supply in recent months. However, with fuss over OPEC member-Iran and EU embargo on Iran coming in force from July, pressure on the sanction-hit state continue to mount.
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