02 January 2015
In the past three months, the price of crude oil has fallen dramatically, from higher than US$100 per barrel to below US$60 per barrel. The plunge in oil prices has significant influence on our daily lives, but how will the low price affect Asian countries?
The major cause of the recent oil price fall is the increasing oil production in the United States as advanced technology enables US oil companies to extract previously untapped shale oil and gas. Although remaining a major oil importer, the US now produces more than half of the oil it consumes. One salient consequence which may have great geopolitical impact is that the US has overtaken Saudi Arabia as the world’s largest oil producing country.
On the other hand, Saudi Arabia, the leading member of the Organisation of Petroleum Exporting Countries (OPEC) and the world’s largest oil exporter, is unwilling to cut its oil production to reduce global oil supply. At a recent energy forum held in Abu Dhabi, Saudi Arabia’s Oil Minister Ali al-Naimi restated Riyadh’s policy of not cutting oil output, and blamed the non-cooperation of non-OPEC member oil producers for the drop of oil prices.
…Lee Chia-yi is an Assistant Professor in the International Political Economy Programme of the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University.
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Last updated on 03/12/2015