Analysis Oil Trade Arabic Spring

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  • Topic: Peak oil, Petroleum, Supply and demand
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  • Published : January 22, 2013
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Project economics Market investigation
Project economics Market investigation

St. Maartens College

St. Maartens College

Guido Kinds – T4Y

Guido Kinds – T4Y

In this oil price analysis I will discuss the impact of geographical and political events on the demand and supply of oil. I am going to do a price analysis over the oil price’s highlights of March 2011. Like prices of other commodities the price of oil swings in times, when there is a shortage or oversupply, and responding to changes in demand as well. Since oil is a natural resource it is scarce, and it’s supply is limited. March 2011 was a very weird month for the oil market, given the fact of key events the Arab spring. Also the big tsunami in Japan had its effect. So my research question will be: What kind of effects do geographical and political events have on the oil price?

Here is the data I will do my analysis on:
Data Oil Price WTI Month March 2011|
March 1| 99.63|
March 2| 102.27|
March 3| 101.92|
March 4| 104.34|
March 5| -|
March 6| -|
March 7| 105.37|
March 8| 105.06|
March 9| 104.39|
March 10| 102.73|
March 11| 101.14|
March 12| -|
March 13| -|
March 14| 101.20|
March 15| 97.23|
March 16| 97.99|
March 17| 101.47|
March 18| 101.06|
March 19| -|
March 20| -|
March 21| 102.36|
March 22| 104.53|
March 23| 105.21|
March 24| 105.04|
March 25| 104.89|
March 26| -|
March 27| -|
March 28| 103.54|
March 29| 104.34|
March 30| 103.80|
March 31| 106.19|
Graph Of Oil Price March 2011
Data for table and graph: (Y Charts)

So I will start at the beginning. I will first explain the tops and peaks and the reasons. The first peak is on march 2, where the WTI crude oil spot price stands on 102.27, is quite a bit more than on the day before (99.63). This is because of the political uprisings against Khadafy in Libya. Libya is a big supplier of oil, but at this time the army did not allow oil export. This means they had to get it from another place. Saudi Arabia compared to the other OPEC countries was the best option only they couldn’t supply this much amount of oil in a short amount of time because the oil refiners can’t handle it. This means there is a shortage in supply. (Oil market disruption in Libya)

So there is a change in supply because another determent than the price changes (Workbook 18), although it does effect the price. As we can see the price rise. Here is a supply curve to explain the event:
Supply Curve Change In Oil Price:

As you can see the supply falls, so the price rises just like in any other situation would happen. (Supply curve)

Than we see a small drop, but then very rapidly afterwards we can see the price keeps rising until the 7th of march. Although there is unrest is the Middle East and north Africa there are no further actual disruptions outside Libya. But due to all the violence there is a great chance Libya´s oil production will be down for a long term. Since the unrests have now also reached countries like Yemen and Syria traders are getting concerned that oil rich areas like the Persian Gulf could disrupt disturbance trough worldwide oil supplies. These are the main reasons for the rise of the oil price. (Oil prices march 2011)

After march 7th we can see a very rapid drop in the oil prices. The main reason for it is because rebels invaded into Tripoli and claimed to have conquered 80% of the city and the 41 year lasting regime of Khadafy came closer to an end. The oil production is slowly starting again. Analysts were divided about how quickly Libya can produce at its old level which was about 2% of the world. Also the world’s global economy has gotten worse partly from the rising energy prices this year. The demand for oil was getting less, which...
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