Within a time span of twenty-seven years between 1973 and 2000, the global oil market has been shaken by two major unexpected "shocks".
In this context, it is worth recalling the definition of an oil shock, that is often confused in the minds of the public. This phrase has been used to describe the effects of both inflation and recession, the economies of importing countries, and the levies resulting from rising oil prices.
After this period, some experts believed that the oil market would benefit from some stability. But in 2006, the price of oil nearly tripled, surpassing the $ 70 mark.
As the previous oil shocks had occurred in a particular macroeconomic context, and were attributed to the current surge in oil, we can ask whether or not we are facing a third oil crisis?
The definition mentioned here refers to the oil shocks experienced by the world in the 1970s.
An oil shock is defined as a sudden increase in oil prices . It can also be linked to a decline in production. When we speak about the shock, this increase should be the triggering factor of several measures taken by economic agents in order to reduce and regulate the price of a barrel. One example is measuring the decrease in energy consumption.
The first oil crisis that the world has ever known occurred in 1973 during the Yom Kippur War.In retaliation for Western support for Israel and the Arab countries of OPEC, an embargo on oil shipments to Western countries in October 1973 was declared in Kuwait. Moreover, they decided to raise the price of a barrel by 70% and cut production by 5% every month until Israel evacuated all its territories.In the end, there was a 400% increase experienced in the price of a barrel of crude between October 1973 and January 1974.
This increase is directly attributable to producer countries and the United States did not object because the actual profit margin was not reduced. For their part, countries of Western Europe had to take serious steps to reduce their oil consumption. It is in this context that France accelerated its program to build nuclear power plant.
The various measures taken by the oil importing countries resulted in gradual decline in oil prices.
Tags:Oil crisis, 'Oil shock', global oil market
[...] The increase in oil prices helps boost return on investment and exploration and production.The oil crisis is more a problem of refining a problem of supply of raw materials. B. Sensitive alternatives: the black gold is a unique product Oil has been a great opportunity for humans.It is the concentrated energy perfect fluid, and is easily transportable. By burning it in small quantities, we obtain enough energy to run engines. Oil is the main source of fuel for automobiles, airplanes and boats. [...]
[...] " It follows that "the United States are obliged to ensure that oil can usually be sold on the market, oil producers to invest to increase production and exports can continue unimpeded." Oil is a strategic and economic challenge.The oil reserves in Europe and the United States are rapidly dwindling.(The share of OPEC has increased from 29% to 65% in 2030).Now, countries like Iraq have the third largest oil reserves in the world (behind Saudi Arabia and Russia, just ahead of Iran and the UAE).If oil supplies from the United States was previously ensured by maintaining an obedient regime in Saudi Arabia and other oil monarchies, these alliances are cracking and the instability in the region threatens to undermine the U.S. [...]
[...] Disrupting the oil industry for their economic revival or for protection of their wealth Russia has only of world reserves, but with soaring prices in 1999, it has benefitted by using an offensive energy policy to boost growth.This is based on control of export routes for fuels with a stranglehold on Central Asian energy resources and energy infrastructure in CEE countries acceding to the European Union, which tends to disrupt the oil market. In addition, with growing insecurity in the Middle East and slowing investment in this region , the OPEC produced oil just in time when there has been a surge in demand. [...]
[...] The main reason, which proves that this crisis can not be treated as a true oil shock is that there is no strong response of the economy and its actors. For, indeed, no real decision has been taken by economic agents to take immediate action, which would result in radical chain reactions throughout the economy. At company level, despite rising production costs, we are not witnessing a significant decline in consumption, higher selling prices, or even exceptional job cuts. As regards households, we are witnessing not a reduction in consumption, let alone a run on gas stations for fear that prices rise again. [...]
[...] Embargoes and sanctions Oil has always been presented as a resource and as a lust for weapon or as an instrument of influence for both the consuming countries and producing countries. Therefore, because of these unlawful retaliations under international law, a climate of tension was created at the root and assumptions of an oil shock in the 2000s began. We distinguish between embargoes in producing countries that refuse to sell their oil to consumer countries that targeted economic sanctions of the UN in maintaining the stability of international order and the "U.S. [...]
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