The supply and demand of Crude Oil Term Paper Example | Topics and Well Written Essays - 2000 words

The supply and demand of Crude Oil - Term Paper Example Supply of oil at the global level is becoming progressively tighter with the passing of the day and this phenomenon is referred to as one most decisive factor that has lead to the recent massive towering of oil prices. This paper is intended to study in detail the price condition of the current global oil market and the trend of demand and supply shown by the different importers and exporters. Information collected from secondary sources is reviewed in the next section of the paper and is analyzed in the third section. Based on the analysis recommendations are added to the concluding portion of the paper. Literature Review Demand for petroleum products in the region of the Asia-Pacific countries is showing a growing trend. China is in particular, one of the fastest growing economies in the world and its noteworthy economic development creates high demand for crude oil. India is the other significant developing country where the demographic factor leads to high demand of crude oil. Th ese countries are big importers of oil in the international market. According to the preliminary statistics published in the reports of the U.S. Energy Information Administration (EIA) in the history of the US, it is the first instance in 40 years time, that China has reached the top position in the rank of net oil importers in the world exceeding the net import of the United States. This outcome has partly occurred due to the rise in taxes in the United States that is considered as a potential reason by analysts behind distorting the country’s net oil imports (Oil Price, 2013). On one hand, a score of regulations related to the petroleum industry are relaxed by a number of countries, which assures that the pressure for compressing the demand and supply of petroleum is going to be reduced to a certain extent. This is because deregulation is expected to expand the worldwide trade in crude oil and petroleum products over the years. However, on the other hand, the regulation is being implemented in the different countries at differing paces, which creates differential levels of participation in international trade by these countries. Free trade might be hampered by the economic condition and the policies adopted by the importing country which dictates the level of import in the country (Nakanishi & Komiyama, 2006). Trends in energy consumption trends show that the total consumption of primary energy in the world was near about 10,800 million tons oil equivalent (MTOE) in 2010. The forecast of the total consumption for the year 2030 is around 16,000 MTOE. This shows approximately 1.2 times and 1.7 times the total consumption figure estimated for 2003 (estimated at about 9,300 MTOE) respectively. American oil boom The newly arising oil boom in America is bringing marked changes in the petroleum market in the whole world. According to the opinion of experts, the emerging importance of America in the petroleum market is reducing the influence of the OPEC count ries on this market and reducing the OPEC’s impact on political upheavals related to prices (Incantalupo, 2013). The U.S. government has revealed after a study conducted by the Energy Information Administration that technically estimated amount of recoverable oil from proven shale reserves in 41 countries is approximately 345 billion barrels (Reuters,