The price of oil depends on the excess supply against a strongly growing demand. The situation, despite the drop in the extraction of unconventional US fields induced by the drop in prices, is destined to last, because the producing countries, OPEC and non-OPEC, are too dependent on crude oil to meet the needs of the public budget and support the growing welfare expenses, necessary to guarantee consent. This is one of the conclusions of Massimo Nicolazzi, head of energy for ISPI (Institute for International Political Studies), who gave an all-round report as part of the AIAF (the association of financial analysts) conference on oil, starting with the impact of US shale oil and Saudi policy, the primary cause of the fall in prices.
And now? It is possible that within the year there will be a gradual rebalancing between production and consumption with an effect on prices. “When – says Nicolazzi – the ways of disposing of the existing shocks will tell”. But the price volatility that distinguished the first part of 2016 shouldn't come as a surprise: “Oil has always been a cyclical and volatile animal; volatility has always been his form of business as usual”.
