Since mid 2014, Oil prices has been on a decline from $115 to $42 now. There're only two real reasons:
- Over supply
- Weakening demand
Reason number 1 is really the bigger reason rather than reason 2.
Supply will likely remain high, worsening the glut
- OPEC raises output limit despite record low oil prices, despite protests from struggling OPEC members (from 30 to 31.5m barrels/day, EXCLUDING Indonesia)
- Russian Energy Minister say output cuts "isn't viable"
- Russia's output is close to record level now
- Iran will bring more supply once sanctions are lifted in 2016, and its output won't be below pre-sanction levels, worsening the supply glut
Oil in 2008 fell to $40 too
Well really, except this time it's different.
Back in 2008, when demand plummeted due to the financial crisis, Saudi Arabia brought OPEC to cut production in a bid to lift oil prices. ......
