EDITORIAL: Future cheaper oil is good news

Thursday November 7 2019

The world will in the next few years be supplied with a lots of oil. This follows heavy investments and new discoveries which are going on in the world, mainly in deep and ultra-deep waters.

Oil is energy mostly depended by industries, transport sector and households. According to Organisation of Petroleum Exporting Countries (Opec), the current price is nearly $60 a barrel, but analysts project future price drops, due to increased supply, especially from new discoveries.

Opec member countries usually set prices according to their wish, so new discoveries by other countries, which are non Opec, will automatically break the domination, by making the commodity available, which may lower prices.

According to Rystad Energy, the Norwegian research analytics, from 2010 through 2014 around 3,000 new oil fields were sanctioned, and that around 800 of them did not create value.

However, it is expected that from 2019 and 2023, companies will aggressively be investing on offshore oil discoveries projects.

In its recent report, Rystad says the massive wave of investment that went into offshore oil projects earlier this decade may produce a lot of oil. As the supply and demand is concerned, the more oil in the market will be good news to consumers, especially net importers such as Tanzania.

Advertisement

It is obvious that higher oil prices affect all people’s walk of life from their households, entreprises and countries’ economies- as they erode currencies and increase inflation.