Development in Oil and Gas Retail Industries - Research Paper Example

The standard for spot prices for crude oil is considered as Brent crude oil. The prices of crude oil in the Brent crude oil index have been varying from $100 to $115 since 2012. In this period the supply of liquid fuel has increased in the countries of North America especially the USA and Canada. However, there has been an equivalent drop in the production and sale of crude oil from countries of North Africa and some countries in the Middle East. While an increase in supply from the USA and Canada has brought into the market an additional 4 million barrels per day of crude oil since 2008, supply disruption and outages in North Africa and the Middle East have largely offset this effect and prevented the prices from falling down.

It is estimated that unplanned oil production outages have caused an average of 2.7 million barrels per day over the past two years and another fact is that the outages have increased from 1.8 million barrels per day in 2012 to about 3.5 million barrels per day in May 2014. The main outages have been caused by OPEC countries such as Libya and Iran and non-OPEC countries such as South Sudan and Syria. The most problematic factor and the riskiness of the matter are that it is very difficult to predict when the supplies will return to normal levels given the geopolitical tabulations that are going on in these countries.

The demand for oil has remained on the lower side in recent years and this has contributed to the oil prices remaining stable for a large part of recent years. The demand growth from countries outside the OECD has slowed down due to the fact that economic growth in countries such as China, India, and Brazil has decreased in recent years. The slower growth in the economies of these countries has correspondingly seen a decrease in the demand of the liquid in comparison to the past two decades. The consumption of liquid had reached a peak of 50 million barrel per day in the year 2005.

Since that time however the trend has been downwards.