As many of you may know there is a fall in oil prices and it is creating both winners and losers around the world. The average man  may not be aware of the matters that influence this crisis , but it seems there is more to this than meets the eye. Several reasons have influenced this and I am just writing to give a quick overview of this.

One of the key factors of this crisis is that there is too much supply of crude oil and less demand for it. This can be  seen as the Chinese who are big consumers of oil is slowing down in purchasing. There is also the fact that countries such as Japan are using their own natural gases as a substitute to crude oil and there is a clear demise of demand there.

The strong US Dollar is also playing its part and reports suggest that the dollar hit a 4 year high in October 2014 and ample supply and a strong U.S. dollar continued to be the key points pressurizing  the oil market. After all they are the world’s biggest consumer. If the USD were to fall then the oil prices would have been supported more than the current market is based at.

But the most surprising element is the fact that OPEC won’t come to liberate this and Saudi the giants of the OPEC aren’t particularly keen on getting involved in this crisis.

Just to show you how much the prices have dropped, the price for West Texas Intermediate in June 2014  was $107/bbl and at the time of writing(January 2015) it is $44.61/bbl.

So coming to the point of this article, countries that export oil such as Russia,Venezuela and Saudi Arabia become the big losers, while the consumer nations like the United States , Japan and China have become the winners. Venezuela is on the verge of defaulting their debts and Russia too is in trouble as the Ruble has fallen drastically.

(International Energy Agency)                                (US Energy Information Administration)