The sharp fall of oil prices in the period of 2014-2016 has been contributed to by both internal and external factors. Understanding the internal and external factors of oil drop prices is significant in assisting the energy sector to understand the macroeconomic effects. Internal factors such as the numerous fights among OPEC members have affected oil production and exploration process thereby contributing to drop of oil prices. For instance, studies have shown that Kuwait and Saudi Arabia have engaged in constant war on oil price. They have been reducing the oil prices to maintain their market share and competitiveness in the Asian market. Therefore such fights have made significant contributions to the drop in oil prices in the recent years (Griffin & Teece 2016).
The various external factors that have contributed to decline in oil prices are discussed below. The U.S oil boom has contributed to a drop in oil prices in the global economy. The U.S Shale oil production has shown significant improvement in oil production and profitability since 2008. Studies reveal that the U.S has been producing more than 9 million barrels of oil every day. This has generated availability of large volumes of oil in……..
The post Internal and External Factors that contributed to Drop of Oil Prices
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