Oily Meeting

What’s Abd?!!
Saudi Arabia’s Oil Minister announced that the country will increase production of oil to 9.7 million barrels a day beginning in July to meet increasing demand.
Woah! SO much har??
Well, oil prices have been increasing beyond sustainable means. Therefore, hopefully an increase in the production of oil will be able to bring the price down.
That’s possible huh?
Theoretically, it is. If you learn Economics in school, you will learn that there is a co-relation between Demand and Supply. A high demand with low supply results in high prices whilst a Higher Supply against a Slightly Lower Demand will result in lower prices. However, realistically, a lot of other issues comes into play in the determination of prices.
Really? What is that?
Speculation in the markets and other political decisions internationally.
Market? Wet Market want to speculate wat?
Not wet market!! The Stock Exchange Market.
Oh!! Hehehe…The only stock I know is livestock at wet market lar.. So, what about this speculating and politics?
Every single speculation/ rumour that is spread, affects the prices in the exchange market globally. Decisions made by politicians also affect these prices.
A speculation/ decision by a country that is considering to wage a war would definitely result in a steep increase of oil prices. This is because, with such speculations/ decisions, it results in a frantic selling of stocks in the exchange markets. This selling of stocks is done as investors or market players do not wish to lose money heavily and to keep whatever money they have already gained.
Wahh… So, how now?
Well, the move by Saudi Arabia is indeed laudable. However, over the years, demand for oil will definitely increase as emerging economies such as China and India continue to grow.
Britain’s PM Gordon Brown also suggested that all countries should explore alternative sources of energy, including nuclear energy.
Nuclear Energy? He SURE or NOT?? Iran building facility to build nuclear energy and the US,Israel, UK are telling them to stop. Ironic!!
Well, true! I agree! Iran’s ambition to build a nuclear energy facility has come under much scrutiny especially from the 3 countries you mentioned. This is because, Iran is a military threat to Israel. But then again, politicians often says one thing and does another – especially those with a lot of political power globally.
Well, what to do right? We can’t vote against them!

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