Children's Web magazine...
Entertaining , Educational, Fun,Informative and MORE

Kharg, Oil and the Modern World (pt.1)

Kharg, Oil and the Modern World (pt.1)

Kharg, an isolated area largely unknown to man, has begun to surface once again as investors and international oil traders start to pay increasing levels of attention to the oil heaven. Kharg is a little island 25km off the coast of Iran where it has begun to gain exposure as a result of half a dozen large oil-tankers and additional flotillas of oil vessels and boats. Reportedly, these can be identified by orbiting satellites which capture images of vessels containing up to 50 million barrels of Iranian nation crude oil. The nation has placed these reserves at its economic forefront to help boost the economy as recent nuclear sanctions were lifted allowing mass trade to be re-established.

However, an oil conundrum has arisen as plummeting prices from cheaper Iranian oil has not stimulated large resurgence in global growth seen in the petroleum industry. Or, likewise, have not shown significant signs of slowing oil production…

As the international nuclear sanctions were lifted far more oil obtained was distributed; Iran thus became confident to regain its share and hold on international oil trade. Iran is also a member of the Organisation of the Petroleum Exporting Countries, (OPEC) where it is also a founding member. OPEC is the world’s largest cartel, operating under formal collusion; which alludes to the fact they are legally allowed and encouraged to manipulate oil prices in order to stabilise the market.

OPEC ensures the successful coordination of the petroleum policies of member countries and aids the stabilisation of oil markets. It does this through allowing constant controlled supply of oil into the market for a steady income to be received. Ultimately, this results in fairer capital returns for investors in the industry. Between 2011 and 2013, Saudi Arabia’s national commercial and state owned petroleum and natural gas company - Saudi Aramco - has dominated the oil markets as access to cheap reserves and rapid production pushed them ahead of Iranian production allowing them to recapture large parts of shares.

Gaps between Iran and Saudi crude outputs continued to widen; with Saudi Arabia production soaring and growing from 7.8 million barrels per day in 2010 to over the 10 million barrel mark in 2016. Whilst becoming an oil giant within the market this has caused even higher oil production as many smaller private firms are forced into obscure areas in the Arctic and deep waters off Angola, which ultimately adds to the current world’s supply of oil. Now capitalising on the market share that Iran had within OPEC as a whole, (falling dramatically between 2011 and 2013) Saudi Arabia took much of that share and with Iran’s sudden rise and entry into the market, producers now fear excess supply of oil into the market. In conjunction with such low prices, due to the stockpiling of oil, this spells out a disaster as the market is now flooded with greater supply of the commodity. In a bid to show dominance, the two nations keep pushing supplies up for market share and profits.

 

Image Credits: starmarine.net

0 Comment:

Be the first one to comment on this article.

Thank you for your comment. Once admin approves your comment it will then be listed on the website

FaceBook Page

Place your ads

kings news advertisement