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Tuesday, September 26 2006 @ 01:11 PM Central Daylight Time
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Oil prices have dwindled to less than $60 for the first time in six months following a return to normal in the Middle East and improving supplies of oil in the United States, Germany and Japan.
A barrel of light crude oil in the United States has dropped to $59.5 in price, while a barrel of Brent crude oil is on the market at $58.5.
Global anxiety over oil reserves, the stormy season in the Atlantic, concerns over the course of events in Iran and Iraq, and financial vulnerability in the United States all contributed to a swell of oil prices in mid-July when they spiked at $78.40.
As these worries began to subside, a depreciation of 23 percent in the price of oil was seen over the last two months.
Although experts predict oil prices will remain at this level for a while barring an unexpected crisis, the recent tension between the United States and Venezuela is still a source of worry.
Tension rose between the two countries when Venezuelan Foreign Minister Nicolas Maduro was held in police custody for a short while at John F. Kennedy airport in New York before joining the United Nations meetings. Venezuelan President Hugo Chavez had sharp criticism for the situation in return.
Venezuela owns seven percent of the world’s reachable crude oil and is a country with an active membership to OPEC, or The Organization of the Petroleum Exporting Countries.
Professor Sohbet Karpuz, an expert on global oil markets, attributed the decrease in oil prices to the following points: the recent absence of hurricanes in the Gulf of Mexico; a decision from OPEC to maintain production at a specified level; a reduction of violence in Lebanon; a green light from the Iranian administration to begin talks over their nuclear program; the high availability of crude oil supplies in the United States; the availability of diesel and fuel oil supplies at a level higher than the average of the past 10 years; a statement from BP that they will soon recuperate the loss in oil production with their fields in Alaska; and the discovery of a large field of oil in the Gulf of Mexico by Chevron.
Meanwhile, as Russia earned 52 percent of its entire profits last year from oil sales, the government in Russia established an “endurance limit” as a precaution against a sudden fall in oil prices.
The Russian economy will not be negatively affected by a decrease in the price of Ural crude oil to $37, said Aleksey Kudrin, the Russian Finance Minister.
Edwina Baniqued
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