Rwanda:The Oil price keeps dropping again

According to the Ministry of industry’ announcement, the price of oil per liter in Kigali keeps dropping and it is set for 810 Rwf per liter.

The decision is meant to be applied from yesterday but the price of the oil started dropping since the beginning of this year, 2015.

Since that time, the price kept dropping and at the international level, the situation remains the same.

A number of theories have emerged to explain this phenomenon. OPEC itself posits that the declines are due largely to speculation in the market and that demand isn’t as low as many may think. Others contend that increased competition—in the form of increased U.S. shale oil production—provides incentives for OPEC to keep prices down. However, some studies suggest that oil prices have to fall to $60 or even lower to halt shale production growth.

Both would explain the recent move by U.S. driller Continental Resources Inc. to monetize its hedges in the oil market. Not only does it show great confidence that demand will recover; it also provides Continental with added liquidity ahead of a potential price war with OPEC.

Some argue that Saudi Arabia, the world’s largest producer, is defending its market share by cutting prices rather than production. Others would go so far as to say that Saudi Arabia is pushing prices down to hit its regional rival, Iran, where it hurts most; the economy.

Some estimate that Iran needs oil at $136 a barrel to finance its growing spending plans.

UM– USEKE.RW