Oil - It’s HOT: Why?

June 30 2008, $141 at 9.30, $141.35 at 9.35, $142 at 10.00AM and now $143. What is all this? Do not stress your mind this is not a game but this is the price for 'Black gold - OIL'. Many of we know that oil prices are surging up in spite of increasing output from Saudi Arabia. So the question comes why this oil prices are going up? Is their any black market is working for this or is it just a bubble which can burst any moment? Let’s see what the reasons for this high Oil prices are?

Before go into details lets first look at some figures which will clearly shows what is happening with the market.

Oil $10 (12/98)
$68 (7/2007)
$143.67 (June 30 2008)

In last 1 year crude prices are suddenly doubled. There is no. of reasons for this. Let’s see all this reasons one by one.

World is progressing. Countries which were in a development phase now on the verge of changing their status from Developing to Developed, Big economies to bigger Economies. Countries like China, India, Brazil, and Russia are on a high. Economy is booming and with that consumption is increasing too. Countries like China and India requires more oil then the usual and so the demand goes up. And it is very important to increase oil production. But it is not happening at this moment.

when demand is high black marketing starts. This has really created a chance for storing oil and makes some money by increasing prices. Last year in US when people understood this situation started investing in Oil futures. They started storing Oil and selling those at higher rate. This suddenly increased price. At the same time US sub prime problem came up and companies started making big loss. Big investment firm saw scope in oil commodity market and started investing in that. They started selling Equities and started purchasing Oil futures which took Oil prices further up. Currently so many Investors are investing in oil futures and still prices are going up.

Third reason for this is that US economy is not doing well and value for dollar is decreasing. If dollar value decreases further oil prices still go up. If we check oil prices in Euro it is not changing that much, it is quite stable. And this problem remains their till we price oil in dollar.

And this is the main cause for oil politics. Countries in OPEC like Iran do not like US's super power status. They are not happy with United State’s view on them. Iran has a good amount of oil with them. And there are some oil producing countries like Venezuela faces personal differences with Us government. OPEC is body of producing countries. They keep certain limit on oil production. They all know about oil price problem in the world but because of their differences with US, some countries in OPEC are not allowing to increase oil output extensively to bring down oil prices. Iran and other OPEC countries are suggesting that the valuation of Oil should not be calculated in Dollar other currency take its place. And because of this they are not allowing to bring down Oil prices.

At the same time world is gearing up for biggest sports meet, OLYMPICS in China. It is expected that their will be millions of spectators arrive in China for this event. Now, black marketers are waiting to take advantage of this situation. They will not allow Oil prices to calm down easily.

With this we should hope that Oil prices should come down so people can relax. They can enjoy their lives. But will this OIL PRICES COME DOWN?