26th June 2017
The oil price (WTI) has dropped by 12% since the beginning of June. The barrel traded USD 42.5 on June 21, while analysts saw its stabilisation between USD 50 and 60. Historically, drops in oil prices did cause other raw materials, among which, gold and copper, to lose ground as well. A drop in oil was associated with week macro environment (bad for copper) and falling inflation (bad for gold). This time prices of these metals have not dropped. The market seems to differentiate what is a problem only related to oil: excess supply (shale oil, indiscipline of OPEC) and uncertainties related to growth of demand (rising force of electric vehicles and renewable energies).
Oil will admittedly remain an important raw material, but it may not play the same predominant role in the world economy as it did in the 20th century. As said by a Saudi minister: “It is not for lack of stone that humanity left Stone Age.”