Historically oil has more than once changed the face of global Geo politics and wars.
- Oil played the most dominant role in ending cold war between US and Soviet Union in the late 80’s. US president Ronald Reagan’s pact with Saudi Arabia to flood the oil market led to the demise of Soviet Union.
This time around the only thing changed is dominant player in oil market is US, which is now stands as the largest hydro carbon producer in the world. Due to shale oil boom in the US the growth rate in hydrocarbon production has surpassed both Saudi Arabia and Russia.
- US has now in store close 500 million barrels of oil in addition to 665 million barrels for strategic reserve. That makes 1 trillion barrels of oil available if required.
Russian trouble –
- If a trans-Atlantic trade pact is successful between US and Europe, which will pave towards better cooperation between two large world powers.
- Many countries in recent past have been lobbying US to end Russian energy dominance in the region. Probabilities are high that US might start supplying energies to Europe. That will be the nightmare for Russia. As Europe is Russia’s main playing field in terms of hydro-carbons.
Price differentials –
- In US natural gas is trading about $2.6/mmbtu whereas in Europe and in Japan it is close to $8-9/mmbtu.
The material has been provided by InstaForex Company – www.instaforex.com