Crude oil prices rose last Wednesday as sanctions on Iran and Venezuela have decreased the overall production of oil in the countries. The two oil-producing nations produce around 1.76 million barrels a day and are up for major economic downfall because of the loss of demand.
However, the loss of such a vast amount in the international market also increases the overall prices of oil. There was a 0.3 percent gain in oil prices as they sold for $66.83 a barrel on Monday.
The US placed sanctions have seriously hurt the economy of Iran as their overall production falls. The country has had to face a lot of problems despite being an oil-producing nation. The country’s total production now is 2.6 million barrels a day, after it had dropped from 3.85 million in 2018. The rise in oil prices can have serious consequences for countries that are dependent on oil.
As the gulf nations’ natural resources deplete, countries like Iran and Venezuela are key contributors who can keep the prices stable by taking over their share. However, it doesn’t seem likely that the sanctions placed on them will be lifted anytime soon.
Venezuelans have seen a fall in production to around 750,000 barrels per day in 2019. The production of last year was set at 1.31 million barrels. The consistent decrease in oil prices of both countries will become a problem for the international community who are forced to purchase oil at higher prices. So far, no other countries have come out for becoming replacements for the two countries’ contributions.
The OPEC Secretary-General Mohammad Barkindo attended the CERAweek 2019 energy conference and commented that there was still work to be done regarding the rise in oil prices. So much for acting as a regulatory body for oil-related commodities.
The US has not put other oil-dependent countries into account. The third world countries are heavily reliant on oil and the price increase only makes things worse for them. The inelastic demand for oil has put pressure on poor nations and the overall climate crises have everyone searching for alternate methods of energy production. In due time, we are to see a rise in demand for both solar and wind power as many countries substitute thermal power plants for much greener sources of energy. This is bound to further decrease the demand for oil.