NEWS

Since the beginning of August 2024, oil prices have seen a significant decline in global markets, raising questions about the factors that caused this drop. There are several key reasons contributing to this decline, ranging from economic, political, and technological factors to changes in supply and demand.

Global Economic Slowdown

One of the main reasons behind the decline in oil prices is the slowdown in global economic growth. As the economies of major countries such as China, the United States, and Europe have slowed down, the demand for oil has decreased. Economic reports indicate that some major economies are facing inflationary challenges and concerns about a potential recession, leading to reduced demand for crude oil and petroleum products. Additionally, trade tensions between some countries have led to a reduction in global economic activity, thus decreasing the need for energy.

Increased Oil Production

In August 2024, several major oil-producing countries announced an increase in their production. Some of these countries, such as the United States, Saudi Arabia, and Russia, decided to boost their production to counteract declining global demand. This increase in production has contributed to an oversupply of oil in the markets, leading to downward pressure on prices. It is worth noting that new extraction technologies, such as hydraulic fracturing, have also contributed to enhancing production, increasing the global oil supply.

Technological Advancements and Alternative Energy

With rapid technological advancements, renewable energy has become more cost-effective and more attractive as an alternative to oil. The spread of electric vehicles and the use of solar and wind energy as alternatives to traditional energy sources have reduced the dependence on oil in several sectors. This shift towards clean energy reduces the demand for oil, contributing to the decline in its prices.

Geopolitical Tensions

Geopolitical disruptions have a significant impact on oil prices. In recent months, some key oil-producing regions, such as the Middle East, have seen relative calm, leading to reduced concerns about oil supply disruptions. This relative stability in previously tense regions has helped ease the pressure on oil prices. However, any resurgence of tensions could lead to new price fluctuations.

Strength of the U.S. Dollar

Finally, the strength of the U.S. dollar has played a role in the decline in oil prices. Since oil is traded globally in dollars, a rise in the value of the dollar makes oil more expensive for countries dealing in other currencies. This leads to a decrease in oil demand, thereby lowering prices. During August 2024, the U.S. dollar saw a significant increase, further exacerbating its negative impact on oil prices.

Based on these Combined Factors

The reasons behind the decline in global oil prices at the beginning of August 2024 can be understood. Prices are expected to continue fluctuating based on developments in these factors, and the oil market remains sensitive to any new changes, whether economic, political, or technological.