Oil prices have once again crashed through the ceiling with a record price of 135 dollars per barrel because of the concerning fall in American reserves of crude oil with 5.32 million barrels. The fact is that this is only a continuation of the crisis; food is getting more and more expensive, petrol and diesel are rising in price every other week in Croatia (as well as in many countries around the world), and there is no end in sight to the price hikes.
This is reality, energy is in the hands of profiteers and has lost touch with the real expenses. There is no logic here – Davor Stern told us in a telephone conversation. Davor is the former director of Croatia’s largest oil company INA, as well as an oil expert.
Record earnings by oil companies
He added that oil companies earn a lot. Igor Dekanic from the faculty of mining, geology and oil, said that European oil companies are breaking the borders of profitability.
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- The largest companies like IBP, Shell, Exxon, the French Total and the Italian Enia have the largest profits in history. That is a general trend with privatized companies in the world – says professor Dekanic.
Stern stresses that the market itself has some sort of logic, however, the current situation is in a state of psychosis.
- By summer we can expect oil prices of 200 dollars per barrel, and that is not the opinion of the trade, but my own prediction. It is impossible to give any projections of the prices, but one thing is certain, the sky is the limit – says Stern.
Why are oil prices rising?
There are a number of reasons why the oil prices are so “wild”. As Dekanic says, the great increase in demand for oil, and the expansion of use by populated countries, like China, India and Brazil, is not accompanied by the accompanying increase in supply, which is a basic and rational reason for expensive oil.
- However, the geo-political crisis of oil producers, like Middle East countries and Nigeria are putting pressure on oil prices. Also, there have been announcements of the possible fall of production on a global scale, even though production is still rising. Last of all, there has been more and more speculating on oil on world markets, where some analysts estimate that one third of the oil, or up to 60 percent according to other analysts, is re-sold a number of times – says Dekanic.
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