Helping You Build Wealth With Honest Research
Since 1996. Read On...

MEMBER'S LOGIN

MEMBER'S LOGINX

     
Invalid Username / Password
   
     
   
     
 
Invalid Captcha
   
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Investment in securities market are subject to market risks. Read all the related documents carefully before investing

End of Year Sale!
Grab Our Small Cap Recommendation
Service at a 60% Discount




Important: We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
By submitting your email address, you also sign up for Profit Hunter, a daily newsletter from Equitymaster
covering exciting investing ideas and opportunities in India.

AD

The challenge of predicting oil prices
Wed, 1 Aug Pre-Open

If economic and political activities could be measured, crude oil and natural gas prices could have been a decent barometer. No other commodity catches the macro events as fast as crude. Among the recent developments, the sanctions on oil imports from Iran over its nuclear program have brought Islamic Republic's oil production to a two decade low. One should have seen that coming when US put constraints over oil transactions with Iranian banks some time back.

So what could be coming next for oil prices? Will Iran answer back by suspending oil shipments through one of the world's busiest routes (Strait of Hormuz)? What impact will it have on already high prices? Well, there are no straight answers. It will depend upon counter strategy - how long the cut lasts and how well it is met by OECD (Organization for Economic Co-operation and Development) reserves. And then one will have to consider new oil pipelines from Saudi Arabia and United Arab Emirates that bypass Hormuz and have the capacity to meet close to 40% of shortage thus imposed. If you already bogged down by the possibilities, you should know that what you heard so far was just one side (supply side) of the story.

As per International Energy Agency (IEA), the developing nations led by China, Russia, India and oil producing Middle East countries will surpass the developed nations with regards to oil demand. While China and India are preferred hubs for energy intensive industries for offering subsidies, the high oil prices that have boosted the economic growth of Middle East countries will feed energy demand further. One will reasonably expect the increasing set up of refining facilities in non OECD regions to put pressure on refining margins. However, crude prices are too notorious to move on expected lines. It is naive to expect them to follow demand supply fundamentals strictly. All it will need to spur prices up will be positive economic statistics of a region's growth. All these challenges in predicting crude prices are a matter of huge concern. Especially for India. The latter being a major importer (more than 80% of the crude is imported); it emphasizes our need to be alert and proactive so as to minimize the volatilities and be prepared for what we can't control.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

View all commentaries | Archives

Read the latest Market Commentary


Equitymaster requests your view! Post a comment on "The challenge of predicting oil prices". Click here!

  
ABOUT EQUITYMASTER

Since 1996, Equitymaster has been the source for honest and credible opinions on investing in India. With solid research and in-depth analysis Equitymaster is dedicated towards making its readers- smarter, more confident and richer every day. Here's why hundreds of thousands of readers spread across more than 70 countries Trust Equitymaster.

PREMIUM PRODUCTS
QUICK LINKS
POPULAR TOPICS
TRENDING TOPICS
FREE NEWSLETTERS
EQUITYMASTER SUPPORTS
  • HelpYourNGO
  • You Tube
  • Linkedin
  • Twitter
  • Telegram
  • Google Play

Copyright © Equitymaster Research Private Limited (formerly Equitymaster Agora Research Private Limited).

Whitelist | Refer | Terms | Privacy | Contact | About | Sitemap

Phone +91-9136015013

Equitymaster Research Private Limited (formerly Equitymaster Agora Research Private Limited) (Research Analyst)
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Email: info@equitymaster.com. Website: www.equitymaster.com.
CIN:U74999MH2007PTC175407

Name of the Compliance & Grievance Officer: Ms Sonal Ramachandran
Telephone: +91-22-61434003 | Email: compliance@equitymaster.com

LEGAL DISCLAIMER:
Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

All rights reserved. Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

Equitymaster Research Private Limited (formerly Equitymaster Agora Research Private Limited) (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA, Canada or the European Union countries, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.