Why Is The Price Of Oil So Low?
Over the last two days, the price of oil has dropped down to its lowest level in six years.
On Monday and Tuesday, the price of Brent Crude continues to sit consistently below the $45 a barrel mark. The last time this price was seen, was in 2009.
(Source: Live Charts Brent Crude)
But what is causing it?
It's a complicated question, but it all comes down to the economics of supply and demand.
The production in the US has nearly doubled over the last six years, meaning they are importing much less oil. This means countries that previously sold oil to the US, such as Saudi Arabia, Nigeria and Algeria, are now competing for Asian markets, forcing them to reduce prices.
Iraq, Russia and Saudi Arabia are all increasing their oil production and exports are rising year after year. As for demand, the economy of the North Sea and the rest of Europe is weakening, so the need for oil is lagging.
Also, China's recent currency problems have suggested that the world biggest oil importer, may have a worse off economy than expected.