MEXICO CITY, MEXICO – As the worldwide oil crisis continues to resonate in economies throughout the world, analysts predict a continued downward trend of the price per barrel. Lower prices on oil may seem like an initial benefit for consumers with face-value perks such as reduced fuel prices. However, as an international broker and investment author Pablo Soria de Lachica notes, the true consequences of this type of plunge creates a variety of negative effects – and potential crises – in countries throughout the world.
Reports continue to come in from across the globe noting the sources of ongoing depreciation in oil prices. The latest news out of China speaks directly to the potential risk: As the Chinese stock market continues to dive, the overall global demand for commodities drops with it. This includes oil, with a $15 drop between June and August alone. According to Pablo Soria de Lachica, this type of price plunge creates a high potential for resonating economic effects, which can impact virtually every industry in areas all across the world. “As the economy in China slows, the overall demand for oil continues to diminish,” Soria de Lachica mentioned. “As a result, prices have dropped significantly. With such a worldwide commodity as oil, this type of downturn in China is felt across all countries in terms of lower demand, dropping prices, and the related economic impact.”
Additionally, changes in Iran’s involvement have also directly affected the global oil market. In early July, Iran reached a deal with the U.S. and six other countries to delay ongoing development of nuclear weapons – in exchange for the lifting of ongoing economic sanctions on the country. While the deal relieves ongoing nuclear tensions, the open economy means an even greater flood of oil onto the market. “Iran has the fourth largest reserve of oil and second largest reserve of gas in the world,” Soria de Lachica furthered. “Lifting the sanctions has flooded the market even more and added a surplus supply to continuing driving prices down.”
In the end, Soria de Lachica says that all these factors have come together to create the current oil price crisis. And the problem could potentially grow worse within the near future. A recent analysis from Goldman Sachs warns that oil could drop down to as low as $20 per barrel which could add even more strain to drillers, oil company workers, and other related fields. While analysts are not directly forecasting this significant of a drop, continued trends in oil surpluses could eventually lead to levels this low.
An internationally recognized broker, Pablo Soria de Lachica is a global leader in foreign exchange markets and transactions. A graduate of UNITEC de México’s acclaimed MBA program, Soria de Lachica has spent his expansive career focusing on international trading and global finance. He currently serves as the Director of Business Development for Kartoshka, a Panama City-based trading firm with 18 offices throughout the world in countries such as Mexico, Brazil, and Uruguay. He brings clients a highly streamlined and experienced perspective in the investment market to deliver individualized analysis and investment plans that succeed within the highly competitive international climate.