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Plastic instead of petrol TIME ONLINE

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Last summer, a close adviser to the Iranian spiritual leader Ayatollah Ali Khamenei warned the western industrialized countries that the first shot to be fired in the region around the Persian Gulf would be the oil price soar to over $ 100 a barrel. Back then, the price of a barrel of 159 liters of oil was just over $ 60. But the adviser should be wrong.

After a US military drone killed Iranian general Kassem Soleimani just two weeks ago and the Iranian leadership subsequently attacked an American military base in Iraq, the price of Brent, the most important crude oil, rose to $ 70. But just a day later, it fell back to $ 65. Earlier this week, at $ 64, it was roughly the same as before the conflict.

The fact that President Trump and Khamenei initially refrained from exchanging blows helped to calm the market. But there is another explanation for the rapid relaxation: The global economy is no longer as dependent on oil from the Gulf States as it was a few years ago. In other regions of the world, especially in the United States, the raw material is produced in such large quantities that there is now talk of an oil flood.

Industry information service analysts Rystad Energy estimate that demand for Opec oil in the coming months will total 28.3 million barrels a day. The most recent production was 29.6 million barrels a day, more than a million barrels above. Even if the production quota should drop to 29.2 million barrels in the coming weeks, as the Opec countries have agreed, the supply will continue to exceed demand. Therefore, despite geopolitical tensions, the Rystad analysts believe that a further price drop to below $ 60 is possible.

It was different ten years ago. At that time, it was said that global oil production would soon peak. The business magazine Bloomberg Markets exclaimed "the end of the oil age" in 2008. Because in order to open up new deposits, the oil companies had to work more and more and penetrate increasingly inhospitable areas such as the Arctic. This also increased the risks, and in 2010 there was actually a catastrophe: the deep-sea drilling platform Deepwater Horizon of the BP group exploded in the Gulf of Mexico.

oil price

Price per barrel of Brent variety in US dollars


Source: Businessinsider © TIME graphics

America owes its second oil boom primarily to fracking technology

Eleven workers died at the time, and the consequences of the resulting oil spill can still be felt in the coastal region. Industry insiders assumed that the USA – the country in which the first commercial oil boom had once taken place – would no longer produce its own oil in the foreseeable future.

But since then, production has experienced a renaissance, thanks to the US President Donald Trump could allow the provocation of the Iranian regime without fear of recession in its own country.

The USA owes its second oil boom primarily to risk-takers in Texas, the frackers. They use a method that is controversial for ecological reasons to extract oil from slate layers. Sand, water and chemicals are pressed into a borehole under high pressure to release the oil trapped in the rock. Because this process is expensive, a slump in the oil price a few years ago drove hundreds of frackers into bankruptcy. But the setback was not permanent. The companies that survived the low operate Fracking ever more efficient than ever. Technological advances have made the United States the largest oil producer in the world – ahead of Saudi Arabia and Russia.

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