Who Is the Biggest Winner of Decreased Oil Price?

In recent days, the international oil price get attentions from countries and investors for the continually slump. Since 20 June, 2014, the international crude price has dropped by nearly 25% in just four months. What’s more, the price decreased to less than 80 USD on 15 October. 

 

The price of crude oil influences the benefit-based relationships among international countries. Therefore, different reasons are worked out to explain this issue. Those that insist Conspiracy Theory think that the slump is caused by America and Saudi Arabia who joint together to confront with Russia. On base of oil extraction cost and economic status in Russia, this country will suffer from great economic crisis once the crude price is lower than 80 USD. Thus, Putin, the Russian President declared that crude price less than 80 USD was a grave disaster to global economy. 

 

According to a report published by IEA, it is important to maintain crude price at 80 USD. That’s because, about 2.8% production in the world will be unprofitable with 80 USD crude. Among that, 2.6 million barrels of crude oil are included. The countries that are influenced including Canada, Russia, the UK, China and Nigeria. Facing the 80 USD crude price, even America, Brazil and Mexico can not stand aloof with their Deep Sea Drilling Projects. 

 

So, is that all? Who will benefit from the slump while others suffering a lot? 

 

Actually, the cost of oil extraction is increasing in recent decades. However, the international oil price is not priced on base of cost. It is financial pricing. The price fluctuation is huge. The monopoly pricing of oil leads to high level of crude price in a long-term period. The petroleum futures further this kind of pricing issue. Under this circumstance, Russia, Saudi Arabia, Iran, Venezuela and other oil exporting countries benefit a lot while the importers’ interests are hurt. Counties and regions like China, America, Europe and Japan have to spend more when purchasing oil of the same quantity. It is adverse for the consumers in these countries and regions. Moreover, global economy will also be affected. 

 

It is analyzed that, Russia will be well at ease if the price is maintained at 100 USD per barrel or above that. Otherwise, Russia may facing face financial deficit. It is the same to Venezuela. Therefore, these countries go against the slump. However, it is costful for the oil consumers. 

 

In recent years, Chinese demand on oil is increasing with economic growth. China has become one of the biggest oil consumers after America. With the development of shale gas, America may also become an oil exporter. Therefore, China is the biggest winner of the slump in oil price. It can decrease not only the manufacture cost of enterprises, but also the life cost of citizens. It is beneficial for Chinese economic growth.