Where are oil prices headed

Where are oil prices headed

The answer lies in a combustible mix of Mideast geopolitics and the advent of shale oil.
My, hasn't he proven to be a bull in a China shop. A ban here, an order there. America has its head spinning. But one thing he hasn't done is revoke (रद्द करना/वापस लेना) the US-Iran nuclear deal.
Maybe there is some method to his madness. Iran shot off a couple of small missiles, which made President Donald Trump come down hard on it. But once again, no rescinding (निरस्त करना/रद्द करना) the deal. What were the Iranians trying to do? Perhaps testing how far he would go.
Despite being leaders of only about 13% of the world's Muslims who are Shia, Iran's leadership has been able to give the dominant (प्रभावी) Sunnis a run for their money. The discovery of shale oil in America allowed President Obama to overturn over half-a-century of American foreign policy ¬ a tight embrace of Saudi Arabia as well as Israel ¬ for a clasp with a country that still regards the US as the Great Satan.
How the US smoked the peace pipe with the Iranians while letting them support the Shia ruler of an overwhelmingly Sunni nation to dispatch his people back to the beginning of time is unfathomable (impossible to come to understand). Iran has roped in Russia for the pitiless strikes, and therein lies the rub for Trump. If he tears up the Iranian deal, will he still be able to romance Putin?
Trump sees Islamic State as a clear and distinct threat. He wants Russia to help him knock out IS. IS is all Sunni. Not a single Shia has been suspected of bombings in the US or Europe since 911.In Trump's mind every Syrian refugee, almost invariably Sunni, is a threat.
Trump has also to make nice with Israel. Jared Kushner, his son-in-law and alter ego, is an orthodox (धर्मनिष्ठ/कट्टरपंथी) Jew, who has, wonder of wonders, been given charge of Israeli-Palestinian relations. Guess who he's going to support? The Saudis have proven to be reliable friends of the Israelis, so they cannot be jettisoned (to get rid of as superfluous or encumbering) either.
In this combustible mix of the US, Iran, Israel and Saudi Arabia lies the future of the world's oil. The current oil price is $54 a barrel, double what it was a year ago. Average price for 2016: $43. Will prices keep rising, hold steady or fall?
The US Energy Administration Agency claims that the country has proven shale oil reserves of about 20 billion barrels, a figure dwarfed (cause to seem small or insignificant in comparison.) by Canadian and Venezuelan oil sands reserves of 350 billion barrels. With Trump approving the Keystone pipeline, expect 800,000 barrels of Canadian oil to gush daily through America in a few years. America is awash in oil.
A huge fall in demand at the world's biggest consumer, the US, made the oil-producing cartel Opec's inventory stack up. And up. Prices fell through the floor. Saudi Arabia which has traditionally called the shots at Opec pushed for a cut. But increasingly Iran, and its ally Iraq, wield (उपयोग करना/बरतना) more influence.
Finally each got what it was looking for. Opec would reduce its output by 1.2 million barrels a day by January 2017, with the Saudis cutting by half a million barrels to 10 million a day. Sanction-starved Iran pushed to increase its quota to 3.8 million a day. Crude jumped to $50 a barrel.
China is an oil producing wannabe (aspiring or wanting to be a specified type of) . It has shale oil reserves equivalent to those of the US, and has begun drilling for them in earnest. There then seems to be a glut of oil in the world.
In case Trump lets the Iran deal be, and with the world economy picking up steadily, oil should hover around $60 a barrel in 2017. If Trump does not honour the deal, Iran could not be sanctioned, and it would continue producing oil at new levels. Once again, oil should stay the same barring a cataclysmic (ध्वंसात्मक) event such as an attack on Iran.
Would oil go lower than today in the rest of 2017? Unlikely, because Keystone won't kick in for a few years, and so too Chinese oil. With production steady and demand relatively so, expect oil not to dip.
What are the implications for India?
The EIA sent a considerable team to India that estimated its shale oil resources at 4 billion barrels, and posted its methodology on its web site. I have not seen any equivalent Indian study. Hydraulic fracturing is a complex process but easily learned. India should forthwith tap its shale resources.
While oil prices remain relatively low, the government must think about deregulating the sector and letting wholesale prices be reflected at the pump. Gouging (make (a groove, hole, or indentation) with or as if with a gouge.) oil for tax makes for easy money. It also makes the government lazy in mopping up the right kind of money.If we are a tax noncompliant society , whose fault is it? Why isn't tax collection as foolproof as counting votes are? Finally, New Delhi has done a hash of a job by abandoning old friends like Russia and failing to cultivate new ones like America. All prime ministers want to run foreign policy, but no prime minister since Nehru has wanted to own it like Modi. The minister for foreign affairs has been reduced to being the minister for twitter affairs.
Construction magnates, builders, real estate moguls (शक्तिशाली तथा महत्वपूर्ण व्यक्ति) have taken over a shellshocked Washington. With Trump, politics is all about personal chemistry. Why not send the external affairs minister to Washington as ambassador? She is quite capable of striking a rapport with the Trumpians. Easy access to American oil and gas, as well as to discovery and drilling knowhow, should top her agenda.