Market Speculations & guesses that triggered oil price

The surge in oil prices in the past several years has led some experts to argue that at least some of the rise is due to speculation in the futures markets. Some of those events are listed below :

• A recent report suggested that Saudi Arabia's oil fields now are in decline, that the country will not be able to satisfy the world's thirst for oil in coming years. This report brought huge swings in prices although the report is still to be verified.

Past events That Triggered Swings In Price Of Oil

Following are some of the events in past that triggered huge swings in price of Oil

• In January 1999 , after increased oil production from Iraq coincided with the Asian Financial Crisis, which reduced demand a low point was reached at $16( US$ per barrel), .
• In september 2006 , US crude oil crossed $80. Multiple factors were responsible for this high price. 1) OPEC announced an oil output increase lower than expected. 2) US stocks fell lower than experts predicted, 3) Changes in federal oil policies , 4) Leftist group in Mexico attacked six oil pipelines .
• In October 2007 US light crude oil rose above $90 for the first time, due to a combination of tensions in eastern Turkey and the reducing strength of the US dollar.
• On November 19, 2007, global oil price reacted strongly as OPEC members spoke openly about potentially converting their cash reserves to the euro and away from the US dollar.
• On July 11, 2008, oil price rose to a new record of $147.27 following concern over recent Iranian missile tests.
• On October 10, 2008, oil traded below $85 on the New York Mercantile Exchange. In response to low prices OPEC scheduled its meeting on November 18, 2008, a month ahead of scheduled meeting to discuss cutting oil production as oil experiences declining world demand.

Market Sentiments & Speculations moving petroleum price

Market sentiments play a major role in determining price of products like petroleum . Certain world events also trigger speculations which become reason for great swings in price . Examples of such events are :

• Markets react rapidly to Petroleum supply disruptions stemming from world events.
• The Middle East is currently home to about two-thirds of the world’s Petroleum reserves and about a third of global petroleum production.
• The Middle East has had mainly security related problems such as :
• Arab–Israeli wars and conflicts,
• Arab–Iranian war and conflicts,
• Arab – Arab war and conflicts,
• US–Gulf wars and conflicts , which hugely affects price of petroleum

• Radicalism
• Terrorist attacks : ( six pipelines were attacked by a leftist group in Mexico.)
• Racism
• Changes in federal laws & policies.