Statement (i) correctly points out that supply was ample while demand growth was not strong. The US shale boom increased global supply, while economic conditions dampened demand. Statement (ii) identifies global economic recession (or slowdown) as a key factor reducing demand. While China's growth was relatively high, its impact on oil demand growth was less significant than in previous periods, and overall global growth was weak. Statement (iii) accurately reflects the low economic growth in Europe, which translates directly into weak demand for energy, including oil.
Consider the following statements to explain the decrease in oil prices which are dependent on high prices and are almost all big oil producers including Saudi Arabia assuming a minimum base of normally 90 dollars per barrel to fulfill their financial obligations: (i) There is no shortage of oil in the world market, while the demand from the consumer class is not that much. (ii) Global economic recession is the main reason, although China's proposed annual economic growth rate is 7%, despite this, the growth rate in oil demand is negligible. (iii) Due to its low economic growth rate, no hope for demand growth can be expected from Europe either. Which of the above statement/s is/are correct?
Asked in HPPSC HPAS Prelims 2014 · Topic: Nature of Indian Economy (Openness of Economy and Integration with Global Markets)
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