After years of sustained, record-high prices,, oil prices have declined more than 60% since June 2014. The recent oil price collapse unlike earlier price drops since 1970s: (in 1986, in 1998, and again in 2008,) which explained either by excess supply or decline of demand, this one is both supply-and demand-driven, with record non-OPEC supply growth in 2014 providing only one of the factors behind it, unexpectedly weak demand growth another. On the supply side, there were two aspects, first US light, tight oil (LTO) extraction technology, which have unlocked a vast resource that long seemed off-limits. Second, Saudi Arabia the largest producer in the organization of petroleum producing countries (OPEC) has been producing in full capacity, which is different policy than the one used be in the past. Where Saudi Arabia has acted as a swing producer, increasing the production when the price is high and lowering it when the prices is low in order to influence the price and keep it in at a moderate level to keep oil as an important source of energy. The latest price drop is also occurring at a time when the dynamics of global demand and the place of oil in the fuel mix are undergoing dramatic change. The drop in economic growth of China the largest exporter of oil , The concern over climate change recasting energy policies driven the increase demand for natural gas, coupled with steep reduction in the cost and availability of renewable energy All these are causing oil to face a level of inter fuel competition, that were not available few years ago.
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