|
Reasons that make global oil market to remain volatile
From Fazle Rashid
1/23/2006
NEW YORK, Jan 22: The ministry of energy in Bangladesh is facing a
financial crunch to meet the import bill of oil for the current year. The
import will cost about Tk 134 billion. Energy ministry has been able to persuade several foreign banks to advance some loan. It will still run short of a large amount of fund. Sonali Bank to which the energy ministry owes a huge amount, as loan, has expressed its inability to advance any fresh loan.
According to the NTV, a Bangladeshi TV network, Bangladesh Bank is also reluctant to come to the assistance of the ministry of energy. Difficult days are ahead of Bangladesh. There is no likelihood of oil price coming down in the international market. The oil price in New York jumped to $66.83 per barrel last Thursday. The international oil market will remain volatile for variety of reasons. The export from Iraq has dropped significantly, the oil installations in Nigeria are under constant attack by rebel forces there who have threatened to cut off the oil pipeline. Iran, in response to a threat by some European countries and the US to move the UN for imposing economic sanctions on it ignoring the call for putting off its nuclear activities, has made it clear that it would curtail oil production in the event of punitive actions.
An acute shortage of oil tankers and the phenomenal growth of oil consumption in China, second only to the US, have combined to make oil market very unpredictable. Though Iran has said it was willing to resume discussions on its nuclear programme with France, Germany and Britain and the European nations have promised not to pursue the UN for imposing economic sanctions, there is yet no developments indicating any change in the situation. Iran is a large exporter of oil. If for any reason oil exports from Iran is disrupted the other producers even combinedly would not be able to meet the resulting shortage.
The hawks in the US Senate are insisting that America should push for economic sanctions on Iran, regardless of consequences. China and Russia have made it clear that they would not side with the move to impose sanctions. They are, however, ready to join France, Britain and Germany in urging Iran to give up its nuclear programme.
Iran with ten per cent of world oil reserve is the second largest oil
producer among OPEC members and ranks fourth in world ranking. It pumps four million barrels oil each day and exports two-third to mainly China and Japan. Iran's standing in the oil market permits it to assert more than others to push ahead with its nuclear programme, experts said. Iran is in a far stronger position than North Korea in this respect.
The best punishment for Iran, some say, will be to stop buying oil from it. But this will would create a big shortage and will lead to an explosion of prices, which will be disastrous for most nations including Bangladesh.
Iran earned $40 billion by selling oil in 2005. The US has barred American companies from investing in Iran. China has made huge investment in Iran's oil industry. Iran is now looking Eastward to offset the hostility from the west. Teheran has given exploration rights to companies from France, Russia, Japan and China. The impasse is seen in the US as a foreign policy and security challenge for President Bush. Bangladesh should prepare itself for meeting a grave oil crisis.
|