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How change in oil prices affect the stock market of GCC prices - Assignment Example

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The prices have reached their least value in the century, and many people are worried about the adverse effects set to be felt by the world at large. However, economists…
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How change in oil prices affect the stock market of GCC prices
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"How change in oil prices affect the stock market of GCC prices"

Download file to see previous pages The abrupt fall in oil prices has a varied effect on the world economies. Most of the oil producers will face economic recessions, and the value of their currencies will depreciate, owing the reduction in the purchasing power. Major oil producers will lose their funds, owing to the abrupt decrease in value of oil. However, the US and other oil consumers have no major worries, and the drop in the prices of oil proves to be a positive movement for betterment of the economy (Mirhaydari, 2014).
The history of oil prices encompasses varied changes though this may appear as the major decrease in the 21st century. Before the industrialization and increased dependence on oil, prices were low. However, the increased demand for oil resulted in an increasing value of the crude oil. It has remained this way for a long time until now. Much of the world still depends on oil, though major economies, such as China, USA, and Europe as a continent, have minimized their consumption, narrowing the market (Stefanova, 2014). The price fall may be attributed to this demand change.
The stock markets of GCC will be adversely affected by the decrease in the oil prices worldwide. The reduction in the GDP of these nations will amount to decreased spending, and thus there will be a reduction in the demand for shares and stocks, minimizing the trade occurrence. A stock market crash may be possible since there will be significant effects on the countries’ economies. The prices of stocks will fall, because of the prevalent low oil prices. Oil is the largest export in these countries, and thus a reduction in the money in circulation, which limits consumer spending, resulting to poor performing stock markets (Morris, 2015).
Oil prices are at their lowest state in the 21st century, resulting in varied effects on the economies of different countries. The US, Europe, and China are some of the ...Download file to see next pagesRead More
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