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Oil can return to the level of 100 dollars per barrel
Akio ShibataPresident of the Institute of Natural Resources Studies, Tokyo
In the 2000-ies. China's economic growth was regularly expressed in double digits due to rapid industrialization and the strengthening of export capacities. Other growing economies also achieved impressive growth, increasing demand for oil and thereby stimulating price increases. Serious players in the market then poured money into the oil markets, betting on further growth in demand and prices. This involved not only short-term transactions, but also the activities of investors, such as CalPERS, a California-based public pension fund.
However, this approach has changed. Perhaps the reason was the 2008 financial crisis, which had a huge impact on the economies of all countries of the world - both developing and others. By the time the world began to recover, China's economic growth had slowed to 7% per year.
Realizing that developing economies will not grow forever, investors have reduced the flow of money, and companies in developing countries began to spend less on equipment and equipment for production. This, in turn, led to a decrease in oil demand. Since June, oil prices have plunged by almost 50 percent, to about $ 50 a barrel, and it is still not clear when the bottom will be hit, especially amid investor fears about a further recession in the global economy.
Exodus from Asia?
The economies of Asia are unlikely to grow strongly due to domestic demand. In the meantime, despite the fact that America has significantly improved its economic position, the US is still looking for strong markets for the export of its goods and services. Lower prices for goods will not help the American economy if exports are low.
However, it cannot be said that the prices of goods will fall indefinitely. In addition, low prices for goods are a plus for production. If this situation forces the company to seek new investment programs, then it can also allay current concerns about lower prices and economic prospects.
In the transportation industry, for example, companies are trying to introduce new types of fuels such as natural gas and hydrogen that can serve as alternatives to oil. If this alternative develops and oil prices remain low, exporters will be able to use affordable and reliable means of delivering large quantities of goods. This will mean that both exports and imports will increase, spurring economic growth and allaying investor fears. The transport sector is expected to become an engine of economic growth - thanks in part to the proliferation of low-cost airlines.
Here again, China can play a key role. The country made large investments abroad in order to secure commodity and production resources. Since the expected slowdown in economic growth is expected in the near future, this may be of great importance. And when this happens, both China and other countries are likely to redouble their efforts to provide themselves with resources.
Translated by Mikhail Botvinnik exclusively for EastRussia.ru