January 20, 2018

Oil Price Watch November 12th 2011

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The oil price rose to over $114 a barrel this week, the rise fuelled by optimism that Italy and Greece are shaping up new governments which the markets  feel have a greater chance of getting to grips with their respective debt crises.

Meanwhile the International Energy Authority (IEA) has warned that the oil price could rocket to $150 and bases its warning around the kind of Issue 6 (difference between short and long run effects) covered in the Oil Price Watch Overview.

It cites factors such as the Lihyan conflict (shifting the supply curve to the left) and  conflict and the slowdown in the global economy (which would shift the demand curve to the left as the dominant factors exercising short-term pressure on prices.

As we noted in a previous Oil Price watch this looks like the short term supply side effects dominated over the demand  side, the net effect being to push prices up. But the IEA sees the supply side and the demand side both working to push prices up in the future,  with as increasing demand for transport
and higher extraction costs (shifting supply curve further left )

Price at end of
week: $114.57 (up from $111.97 end of last week)

Read the Oil Price Watch Overview here

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