Oil price drop good for Israel
Strategic enemies are weakened, while any Israeli oil could come on stream right on time.
With the price of a barrel of benchmark crude oil falling by a half in the past six months, the punditocracy is out in force prophesying about what it all means. Predictably, their conclusions range from “It’s wonderful for the world’s economy in general although certain countries will be hurt” to “It will be a disaster in general although a few low-cost oil producers will benefit”. Conspiracy theories have also proliferated, especially that the fall in price was due to a plot by Saudi Arabia and other low-cost producers in the Gulf region to drive competition out of the market. There is no doubt that they have taken full advantage of the situation, but the situation itself was caused by a simple phenomenon learned by all students in Economics 101: if supply of a product increases and demand stagnates the price of the product will fall. End of lesson, class over until next week.
Bernard Baruch, the world’s best-known financier between the two world wars, was asked by an interviewer what the stock market would do over the next few months. He famously replied, “It will fluctuate”. The same is true for the price of oil and for that matter, all other commodities.