Even at the end of last August Mr. Claude Mandil, executive director of the International Energy Agency (IEA) felt optimistic about the global petroleum situation by saying that the current oil demand-supply was under control and the soaring price might get a fall. World Bank chief economist Mr. Francois Bourguignon also said that the oil price, after jumping up to $50 per barrel, would fall back to about $30 provided that some current uncertainties are removed. But the fact is, the crude oil price in the international market kept soaring and had exceeded $53 per barrel by last weekend. Mr. Philip Verleger, a renowned American expert on energy market, predicated that in the following two years the global oil price might rise to about $70 per barrel.

Global oil price hit a 20 years record in the past few days, and remained high for a time longer than in the two oil crises during the 1970s.

This roused concern about a new round of oil crisis. But scholars pointed out that despite the soaring oil price the demand-supply relations in the market is largely balanced. It can be predicted that there is a meager chance of an oil crisis as long as oil supply continues, but price fluctuation is inevitable.

Cause: bigger demand puts pressure on price

There are many opinions as to the cause of the current oil-price escalation. Many attribute it to the Iraqi war--tighter demand-supply relations enhanced the influence of oil exporters on the price. Others say the strong economic recovery in recent two years caused much higher demand for oil, which as a result led to higher prices. Philip Verleger believes that the wrong judgment by OPEC on the oil market is also a major reason. OPEC should indeed be responsible for the problem, he said. In the previous autumn and last spring and even in recent a few years, OPEC's policy objective has been to keep the oil reserve at a rather tight level, so as to push up the price and it succeeded.

More and more analysts hold that the growth of demand for oil has far overstepped the growth of potential oil supply, which exerted heavy psychological pressure on the market.

Scholars pointed out that the market's demand for oil grows out of three purposes: for consumption, speculation and reserve. For the moment, all three kinds of demands are rising, exerting bigger and bigger pressure on oil price. Since the turn of the century, some big oil consumers, such as the United States, expanded oil imports in succession out of needs for seizing oil resources. The US strategic reserve increased by 100,000 barrels per day and has reached 666 million barrels by now and is expected to reach 700 million barrels, breaking the demand-supply balance on the surface. Besides, statistics showed that the extra need for oil this year reached a peak in 16 years. According to the latest statistics by IEA, the global oil need growth in 2002 was only 0.2 percent, which rose to 2.1 percent in 2003 and further jumped to 4.1 percent in the first half of this year. This means a daily need of 80.6 million barrels, or 2.5 million barrels more for each day. As analysts pointed out, the high oil price is caused by unprecedented growth of need for oil, which has touched the security line provided by APEC's surplus production capacity. Worries about the shortage of supply and oil security on the international market have led to skyrocketing investment needs.

Trend: time of low-price oil gone forever

According to IEA estimation, oil fields that can be easily and cheaply extracted have almost run out and the world oil production would reach a peak before 2015. Oil is likely to become fairly expensive energy resource if mankind enters the post-oil time featuring decreased production, imbalanced oil distribution and monopolized production by a handful of countries and companies. Most experts agree that room for price fall is very limited and the time of low oil-price has gone forever. This is because that behind various short-term factors driving oil price up, the international oil matrix is brewing profound changes, which are the very in-depth and long-term reasons for soaring price.

The present matrix of world oil market came into being after the energy crisis in the 1970s, with most production bases located near developed countries, such as the North Sea and the Mexico Bay. By far oil sources in these areas have got exhausted, and huge investment has begun to flow into new bases in West Africa, Central Asia and Russia. Meanwhile, new big oil buyers appeared--China and India. In the 1990s oil consumption by the two countries only stood at 3.5 million barrels per day, or 5 percent of world total but the figure doubled in 2003, taking up more than 10 percent of the world total.

By People's Daily Online