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As oil prices recently slid below the symbolic threshold of 50 U.S. dollars per barrel, the possible future scenario of the vital energy, which is more than just a fuel but also a maker and a wrecker of global wealth and growth, was naturally a subject of feverish discussions among elites gathering for the annual Davos meeting of the World Economic Forum (WEF).
Factors behind the price falling-off
Among different theories about the oil price crash, including a secret price war with political agenda or simply the consequences of market rules, the surplus of supply over demand was a major factor behind the almost 60 percent slumping of oil prices since June last year.
American economist Nouriel Roubini, the so-called "Dr. Doom" for his early predictions that the housing slump would trigger an economic collapse, said at the Davos meeting that the oil price collapse was driven by economics rather than geopolitics.
Global information company IHS chief economist Nariman Behravesh told Xinhua that one third of the reason could be attributed to the weak demand resulting from sluggish global economic growth, and the other two thirds could be traced to the oversupply due to U.S. shale oil production and the refusal of the Organization of Petroleum Exporting Countries (OPEC) to cut the oil output.
But Lin Boqiang, Professor with Xiamen University and Dean of China Institute for Studies in Energy Policy, noted to Xinhua that the actual supply-demand gap was not that big to push down the price so hard, and another factor needed to be accounted in: speculative activities have taken advantage of unprofitable news and market expectations.
Major ensuing effects
According to Lin, the stumbling oil price directly further dampened the downward price pressure of commodities including steel and coal. Low oil prices put major resource exporters under tremendous pressure, while could be a boost to the economy of major oil consumers including China, the United States and the European Union.
Zhu Min, Deputy Managing Director of the International Monetary Fund, expressed his concerns to Xinhua over the devastating impacts borne by the oil exporters which could be bogged in the mire of expanding fiscal deficit, falling foreign exchange rate and jolting stock market.
These challenges could spill over into other economies in the current closely-knitted global economics, Zhu noted.
He also highlighted that as for China and the United States, which are both oil producer and consumers, the lowering energy price could slow down the investment into energy industry and slash returns.
People's Bank of China governor Zhou Xiaochuan believed that the Chinese economy will be a winner from falling oil prices, but its policy of shifting away from fossil fuels to renewable sources of energy may take a hit.
Possible price trends
The market was on the same page that the oil price would bound back, but opinions on where would be the lowest point and when will it come back varied.
Having reaffirmed its position of not cutting production, the OPEC Secretary General Abdalla Salem el-Badri told media that the oil prices would not slide to as low as 20 dollars a barrel, and will rebound after a time-being.
According to Lin Boqiang, the positive expectations went that the price will come back up within five or six months, while the pessimistic ones held that it would take over one year and a half before the expected rebound.
Behravesh predicted that the low oil price would not last very long, and after fluctuating within the price range between 50 dollars to 60 dollars a barrel, it will come back to the level between 80 and 90 dollars.
However, Bob Dudley, the head of the oil giant BP who held more negative position, said that oil prices would continue the downward trend this year and could remain low for up to three years.
