What's going on?
The price of a barrel of crude oil continued its recent upward slide on Tuesday to its highest level in four years – a barrel of black gold’s now worth more than $80.
What does this mean?
OPEC – a group of major oil-producing countries – controls a large chunk of the world’s supply of oil, which means it has a big influence on the oil price. On Sunday, the group said that it doesn’t plan to produce more oil unless customers need it – despite the US asking for more supply to push the price of a barrel down.
The US believes that its sanctions on Iran could reduce the country’s ability to export its oil, lowering supply and boosting prices. America’s producing record amounts of crude oil at home, so it’d likely be hard for the country to up its production enough to affect the oil price.
Why should I care?
For markets: Forecasts need oiling.
Major oil movers ‘n’ shakers think the current tug of war between supply and demand could push the price of a barrel to $100 before long (at which point, one analyst forecasts growth in demand would be “annihilated”). But BP says otherwise. The oily beast thinks (like OPEC) that this price hit will be offset by more oil production over time, and that a bigger risk is lower demand (as a result of the trade war) pushing the oil price down next year.
The bigger picture: Well oil be damned.
The International Energy Agency says electric vehicles will make up 13% of all cars on the road worldwide by 2040 – stemming oil usage by 2.5 million barrels of oil per day (tweet this). Plus newer, more efficient cars of the future will use less of the slippery stuff – an estimated 17 million barrels each day by 2040, according to a report by UBS. Oil demand is currently around 25 million barrels a day for passenger vehicles, so new auto technology (that lowers demand) could well push the oil price lower over time.