Many countries around the world have been feeling the sting of a sluggish gas and oil market. It is no secret that the prices have gone down over the past year, but things do finally seem as though they could be changing. The price of oil has finally seen an increase, albeit a small one. Many see this as an indication that oil prices have just about hit their bottom and that they won’t go much lower. In fact, most feel that there is going to be a turnaround and that it will happen very soon.
OPEC has actually gone on record saying that they believe the prices could actually reach as high as $200 a barrel. When you think about it, this number actually seems rather outrageous. At such a high price, it would damage the market in a very different way. Think about the price at the pump, for starters. People would simply not be able to drive nearly as much if prices got to be that high. Additionally, those who had to drive for a living, such as shipping companies, would have to raise their prices to deal with the higher gas prices. The cost of everything would rise.
While the $200 a barrel claim seems a bit on the high side, most experts do have a good feeling that the market will be starting to rebound soon. Part of the reason for this is a slowdown in the output in the US. While there are still plenty of active rigs and wells, some are shutting down, at least for the time being.
What Did the OPEC Secretary General Mean?
When you simply look at the $200-a-barrel remark, it can seem farfetched. However, it is important to understand exactly what was meant. The secretary general said he believed that prices could reach that high if people were to stop investing in oil and gas. He believes that cutting back on investment would be a huge mistake that could eventually cause the prices to spike to the $200 mark. He did not go into much more detail, and he did not put a time-frame on when the oil prices would really start rising. For oil companies though, this may mean that now is a good time to start investing in more equipment, production lines, exploration sites, and more – if OPEC is to be believed.
Source: Ventures Africa, Feb 4, 2015
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