Shift In Oil Price
The key points of discussion:
· Exxon has been concerned about developments in the world supply of crude oil. Both Venezuela and Iran have very significant proven oil reserves. Both countries are under sanctions from the US to restrict or prevent them from selling oil.
· To put things into perspective, the world production of crude oil is just over 100 million barrels per day. The U.S. produces about 12 million barrels and all of OPEC about 30 million barrels. As of early 2019, Venezuela produces just over 1 million barrels down from a peak of 6 million barrels. Iran also produces over 1 million barrels.
· Both Venezuela and Iran need the “hard currency” that comes from the sale of crude oil and refined products.
· Russia and China have the technology and expertise to help these countries expand their production and sale of oil. However, Russia relies on the sale of its own oil and gas as a main source of income and has an incentive to avoid the decline of oil prices when Venezuela increases production.
· MCS has been tasked by ExxonMobil with looking at new research into the world price of oil. Find one current article about the price of crude oil and post it in this discussion. Discuss the likely price movements of oil over the next few weeks. What are the analyst’s main concerns? Please provide a link to any sources that you use.