InvestorQ : Why has the crude oil price shot up so sharply to above $65/bbl? What does that mean for India?
diksha shah made post

Why has the crude oil price shot up so sharply to above $65/bbl? What does that mean for India?

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Arya Nanda answered.
4 months ago
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When the icebergs started melting in the Arctics one of the casualties was the extent of snowfall and cold weather that it had on the state of Texas in the United States. Normally know for its warm weather, Texas has seen sub-zero temperatures this year with snowfall blocking most of its waterway outlets. Why is this so important?

Brent Crude oil scaled above $65/bbl on Thursday and that can be largely attributed to the Arctic Blast in Texas. The reason this is important is that the state of Texas in the United States accounts for total output of 4 million barrels per day or bpd. That is nearly 40% of the total output of the United States, which is what makes Texas so central to oil.

The Arctic Blast resulted in most of the waterways that are used to transport oil from the Texan fields to other parts of the US, getting blocked. That is creating a serious shortage in the US markets and it is forced to rely increasingly on imports to meet its needs. The OPEC led by Saudi Arabia appears to be playing its cards close to its chest.

The OPEC led by Saudi Arabia would prefer to wait and watch before taking any decision on supply. As a result, global oil markets are awfully under-supplied and that is leading to higher crude prices. It looks like a supply shock that is driving oil prices higher as oil has now rallied from $36/bbl just 3 months ago to $65/bbl. 

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