• About Us
      Asia’s 1 st LEED Platinum Rated Campus

      Asia’s 1st LEED Platinum Rated Campus

      About Us

      • Chairman's Message
      • Vice Chairman & CEO
      • Dean's Message
      • Governing Council
      • Business Advisory Council
      • Academic Advisory Council
      • Work With Us
      • Mandatory Disclosure
      • Anti-Ragging Notice

      TERM ZERO

      Media

      • News
      • Events
      • In Media
      • Media Kit

      Rankings

      Accreditations

      NIRF

      Campus

      Blog

      Annual Events

      • Convocation
      • TEDxGLIMChennai
      • L'Attitude
      • Digital Symposium
      • Sangamitra
      • Annual Alumni Meet
      • SWIM
      • IEC
      • Human Capital Management
  • Programs
      Transform and Lead

      Transform and Lead

      Full Time Programs

      PGPM

      One Year MBA for professionals with work experience

      Learn More Apply Now

      PGDM

      Two Year MBA for professionals with 0-2 years of work experience

      Learn More Apply Now

      EXECUTIVE EDUCATION

      Partner with us for customized learning solutions for your organisation

      Learn More

      Corporate Programs

      PGXPM

      Executive program for Mid & Senior Level working professionals

      Learn More Apply Now APP. Deadline: 30th August, 2020

      PGPM Flex

      Weekend management program for young working professionals

      Learn More Apply Now APP. Deadline: 30th August, 2020

      MBA in Business Analytics

      Family Enterprises Management

  • Faculty & Research
      Ranked 6th

      Ranked 6 th

      by NIRF ranking in teaching and learning among all B-Schools in the country

      Faculty

      • Full Time Faculty
      • Visiting Faculty
      • Adjunct Faculty

      Research

      • Faculty Editors
      • Papers & Journal Publications
      • Case Studies & Books
      • Conference Proceedings

      Centers of Excellence

      • Centre For Excellence in Retail Management
      • Great Lakes Centre For Management Research
      • Kotler - Srinivasan Centre for Research in Marketing
      • Centre for Excellence in Business Analytics and Business Intelligence
      • CET
      • Union Bank Centre for Banking Excellence

      Conferences

      • NASMEI
      • Financial Conference
  • Recruiters & Companies

      “Great Location for Talent. We are happy to continue visiting and having budding professionals join us and grow their careers.”

      Anil Visal

      Partner - Deloitte India

      Campus Recruitment

      • Recruitment Process
      • PGDM Class Profile 2018-20
      • PGPM Class Profile 2019-20
      • Past Recuiters
      • Student Achievements
      • Recruiters Speak

      Internships

      • Recruitment Process
      • PGDM Class Profile 2019-21
      • Live Projects

      Placement Reports

      • PGPM
      • PGDM
      • Internship Report

      Leadership Series

      • Titans Speak
      • Industry Lecture Series
      • Thought Leader Series

      Talent Listings

  • Alumni

GLOBAL OIL SUPPLY AND THE NEW REALITY – BY Dr. BOBBY SRINIVASAN AND Dr. SUDHAKAR BALACHANDRAN

December 8, 2014 | Posted by bobbysrinivasan << back to blog

Hydraulic fracturing is a relatively new procedure through which the oil contained in the shale is released at a reasonable cost. This procedure has recently helped the US to reduce its dependence of imported oil. Currently, in the US, the oil production from the shale has touched 9 million barrels a day, the highest level for many decades. Because of this, importation of oil from the OPEC countries has dropped to 40% of the total demand. Currently, the import is 2.9 million barrels a day, the lowest since May 1985. In 1988, the dependence amounted to 88% of all oil consumption. Through shale oil production, the supply of oil has gone up by nearly 80% in the last years. This increased production has clearly hurt countries such as Algeria and Libya who are counting on oil revenue to keep their country’s economy functioning. Saudi Arabia, the largest oil producer is sitting pretty on the driver’s seat with no intention to reduce its production. As they say “this time it is different” and so Saudi Arabia needs all the revenue to keep up its promises to its citizens and so cannot afford to reduce production.

At the peak, the Gulf nation supplied 894,000 barrels per day. Now the current situation is different and the game Kuwait Iraq are pumping more oil to the US plan has changed while UAE, Qatar and Iran are losing out their markets. Nigeria is equally hit hard because of this oil production from shale.

Now, the global supply of crude oil increased tremendously, thanks to this US shale production. In the meanwhile, the global demand is dropping to marginally lower levels. This is primarily because both the Chinese and the Japanese economies are slowing down. They import almost 100% of their needs. The current price of Brent crude is $73 per barrel and the west Texas intermediary is $70. This price is a rude awakening to the oil producers who expected a minimum price of $100, and delightful news for countries like India, China and Japan.

What will be the impact of this declining oil prices to the global economy. First will be the disappearance of liquidity in the oil producing countries. What will happen? This will affect:

  1. The internal consumption and the external demand for goods and services which will go down significantly.
  2. Search for new oil will stop since the cost of finding and producing it may exceed the potential revenue that it may bring.
  3. Possible social unrest in oil producing countries as unemployment may increase in them. For several million Indians who are living in the Middle East, it may mean loss of jobs.

For the speculators, it is a fortune to be made. Selling the oil futures for future months and hoping to buy them back cheaper can result in big gains. In fact, there is a possibility even though the probability is small. The oil futures could be pushed to lower levels, possibly to the mid $50. This will create intense competition among the oil producers to flood the market as they need the revenue. When this happens as usual the economists will claim that the oil market balloon got burst. Let us wait and see as to how the oil market will pan out.

<< back to blog

Programs

PGPM - One Year MBA for professionals with 2+ years work experience

Learn More >

PGDM - Two Year MBA for graduates with 0-2 years work experience

Learn More >

Events

Union Bank Finance Conference
Dec 17, 2020

Networking with Champions
Nov 08, 2020

Harry Kraemer on Performance with A Purpose
Oct 08, 2020
Read more

Successful Women in Management (SWIM) Lecture Series
July 05, 2020
Read more

The Great Circle Alumni Talk Series
July 04, 2020
Read more

  • About Us
  • Programs
  • Faculty & Research
  • Recruiters & Companies
  • Alumni
  • Blog
  • Contact Us