Crude Oil Prices

As you know, the price of crude oil has been dropping over the last few months and a week ago the price of Brent crude fell below $50 per barrel. The word is that OPEC deliberately flooded the market (no pun intended), to damage the Russian economy, which reputedly needs a price in excess of $100 per barrel to function. In other words, the present price level is as much a product of the control of output of oil production as the normal much higher price is.

The point is this, oil producing nations would obviously far prefer to sell oil at over $100 per barrel than at $50 per barrel, therefore, it is only a matter of time before the output gets throttled back, so that the price of crude oil rises significantly again.

Clearly, if the current price continues, then there will be many job losses in the Scottish oil industry and exploration will also be affected. This is not a problem which would just affect Scotland (or Russia), the impact of low oil prices would be felt globally.

The word is that people working in the Scottish oil industry are upbeat about the fact that the price of crude oil is going to change - and change soon. So much so, that they are telling friends to buy shares in oil companies at the moment, because they are confident that there will be an upturn in the price of oil soon.

Please note, for legal purposes, I am not "qualified" to give advice on investments, so do not take this blog as a recommendation to invest. I am simply reporting what the mood is in the Scottish oil industry.

If the price of oil came down to show Russia that the world had the capability to damage Russia if it continues with it's policy of aquisition of territory beyond it's borders, then the message has been sent, loud and clear. In other words, we are now at a point where the term "job well done" applies.

In my opinion, the likelihood therefore, is that OPEC will slow production again in the not too distant future, so that prices will rise again.