Price of Oil



Price of Oil

Introduction

For centuries has been a cultural and religious contempt by the Western powers, and in the imagination of their societies, to Islam and the Arab Muslim world, interested only in accessing resources. This has become a deep sense of humiliation, especially in the Arab world, creator of one of the most important civilizations in history, why is seriously abused. Furthermore, in this huge space there is a significant presence of pre-modern and anti-modern forces, as a result of lower integration in general, the dynamics of global capitalism, and the refractory nature of their value system, and therefore of their societies, Western penetration. In fact, Islam, in principle, and until recently generally does not allow the interest on loans of money, central to the international monetary and financial system. While the Arab-Muslim world is a huge space, very diverse, as it has evolved historically on different social and cultural realities, where countries are also highly integrated into the logic of global capitalism, particularly the Gulf oil monarchies (Dahl, 2007).

Questions remain about OPEC's long-term stability. As noted, Iraq was at war with Iran and Kuwait in the 1980s and early 1990s, respectively. In addition, Algeria and Angola had civil wars from 1991 to 2002 and from 1975 to 2002, respectively. Given other differences between member nations, it is probably in the best interest of some countries to keep oil prices low, while others may prefer high prices. For example, a country with extensive proven oil reserves would prefer moderate prices to sustain long-term sales to major consuming nations, since high oil prices stimulate energy conservation and the development of alternative energy sources. Conversely, OPEC nations with modest reserves may prefer higher prices. Members with large reserves include Saudi Arabia, Iran, Iraq, Kuwait, United Arab Emirates, and Venezuela, while Ecuador, Angola, and Algeria have small reserves. As for population, the more populous member nations may prefer high prices to fuel a larger economy; members in this situation include Nigeria and Iran. In the case of income levels, member nations with a low gross domestic product (GDP) per capita may also prefer higher prices to decrease poverty in their countries. On this dimension, Nigeria, Iraq, Ecuador, Angola, Algeria, and Iran would seem to prefer higher prices. Finally, in the case of external national debt, member nations with high debt levels and debt as a percentage of GDP would seem to prefer higher prices in order to help pay off their debts. This would especially be the case for Iraq. Oil is one of the most important and most commonly used commodities of the world. It is the main source of fuel and the world economy is heavily dependent upon fuel prices. In the past, oil prices have faced different trends due to market forces (Barrell, 2004).

Historical performance of the oil market

In the early 60's the United States , which until then had been marginal suppliers of crude oil, which is able to exert influence on price and market ...