18/10/2004 10:53:02 am
Why the High Oil Price? The price of oil has risen by more than 70 per cent during ths past year. Despite the fact that the world economy today is less dependent on oil than it was in the 70s, many worry that this development will stop the global economic recovery. In this interesting paper, my friend Fredrik Hjelmqvist, CEO of Introvista, explains the causes of the rise in the oil price and predicts that it will decrease substantially in the coming months. The main cause of the rise, according to him, is political instability in many oil producing countries. Its the problems with Chavez in Venezuela, Yukos in Russia, rebellions in Nigeria and violence in Iraq. This cuts the supply of oil while the demand is stronger than it has been in a long time. He concludes, however, that most of the increases are not based on economic fundamentals and that the price level will fall again after the elections in the US and in Iraq.
Read the paper (in Swedish) - >