By: Abdul Azeem, Waqas Ahmed & Laraib Khan
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What upcoming for oil Sector
The topic of plunging global oil price is widely and most debated issue among various circles. The crude oil prices nosedived from its historical highs to lows from mid-September, which took investors and governments by surprise, and also hit hard many economies whose revenues slid. For many it is point of concern, while on the other hand it has benefited net oil importing countries Balance of Payments and their consumers. The oil prices are browbeaten by the various factors and in this report we will discuss current oil prices scenario along its impact on local exploration sector.
Crude oil: Reasons for fall from power
The crude oil price saw decline from the start of this fiscal year but decline sharply from mid of September, where benchmark WTI fell from $106.06 per barrel (01’Jul 2014) to $47.69/barrel, showing a significant fall of 55% in 1HFY15, whereas on Year-on-Year basis prices fell by 46%. On the other hand, Brent crude oil fell considerably by circa of 50% in 1HFY15 and by hefty 48%YoY, closing at $53.22/barrel. The foremost delinquent to significant downfall in oil prices are linked to political rift between the West and Russia, upsurge in US oil production, lower oil demand from EU and China, and growing oil production from Libya and Iraq. The situation is further exacerbated by Saudi’s decision not to reduce its oil production.