Crude oil rose more than 20%, oil prices adjusted expectations to rise, oil prices faced new highs

The continued rise in oil prices has sparked heated debate. Due to the conflict between Russia and Ukraine, international oil prices continued to rise sharply, and the issue of rising oil prices sparked heated discussions. Although the new ‘95 Top Up’ becomes popular on the Internet to show off wealth is humorous, it also directly reflects that the oil price is rising too fast, and it is facing the problem that the price continues to increase.

Crude oil rose more than 20%, and oil price adjustment expectations became higher. According to the oil price adjustment news, a new round of domestic refined oil price adjustment window was opened at 24:00 on March 31. The rate of change in the last round of crude oil was 17.13%, and the rate of change in crude oil is expected to rise by more than 20%. The domestic oil price has risen in recent days, and the trend is constantly changing. The oil price of refined products has changed from a falling range to a higher “rising” state, and so far has exceeded the price adjustment red line of 70 yuan.

1.The reasons for the rise in oil prices
The Russian-Ukrainian conflict intensified the trend of rising oil prices. The conflict between Russia and Ukraine has led to increased uncertainty in Russia’s oil and natural gas exports to Europe, affecting market futures prices. The price of Brent crude topped $100 a barrel for the first time in nearly seven years as Russia and Ukraine officially went to war. Short-term oil prices still need to pay close attention to the situation in Russia and Ukraine. If Russia’s crude oil and natural gas exports are sanctioned, the global oil and gas may fall into a supply crisis, and oil and gas prices may still surge.
Crude oil mining has reduced production capacity due to the impact of the epidemic. The conflict between Russia and Ukraine has indeed had an impact on oil prices, but the most fundamental reason is that oil production has decreased after the outbreak. With the large-scale promotion of vaccination, the economies of various countries in the world have begun to recover, but the production of oil cannot be increased all at once. The production is not enough. The economic recovery has increased the demand, and has to consume stocks, resulting in a continuous decline in oil stocks. Therefore, the conflict between Russia and Ukraine has only aggravated the trend of rising oil prices, and the reduction of crude oil production capacity under the influence of the epidemic is the fundamental reason for the rise in oil prices.
Worldwide carbon peaking and carbon neutrality. In recent years, with the increase in carbon emissions, new energy has been vigorously developed, new energy technologies have been continuously promoted, and the sales of new energy vehicles have continued to rise, all of which have formed a negative impact on international crude oil prices.
The rise in oil prices is related to my country’s tax structure. Domestic oil prices have been at a high level, which is also related to the high taxes and fees included in oil prices. Taxes and fees such as consumption tax and value-added tax account for more than 40%, while costs only account for a little more than 55%. Even if the cost of crude oil falls, oil prices will still rise as long as taxes and fees rise more than the drop in the cost of crude oil.

2. The adverse effects of the continued rise in oil prices
The impact of rising oil prices on people’s lives. Oil prices continue to rise and fall uninterruptedly, which will inevitably lead to a continuous and indirect increase in prices. The overall rise in prices will directly affect the livelihood of ordinary people. The longer the high oil price lasts, the greater the probability of various price increases. This also makes ordinary people pay more for the same amount of money; for the same amount of money, they get less things and services.
Rising oil prices mean inflationary growth in international economic markets. Crude oil is a necessary product for industrial production, and it is also an important raw material for gasoline, diesel oil, and lubricating oil that people use daily. Therefore, the fluctuation of crude oil price is closely related to economic development. Once the oil price rises, to a certain extent, the cost of vehicles such as automobiles and means of transportation will increase, and at the same time, the price of living will rise, which will reduce the consumption level of residents. Therefore, the rise in oil prices leads to an increase in inflation in the international market, making the domestic oil market in a state of short supply.
The continued rise in crude oil prices will push up the production costs of companies in some industries and squeeze profits. The continuous rise in crude oil prices will increase the intermediate input costs of the petroleum refining and chemical processing industry, and the transmission of prices to mid- and downstream commodities through some industrial chains may inhibit terminal demand. In addition, the supply of domestic terminal consumer goods is sufficient and the market competition is relatively sufficient, so it is not conducive to the improvement of sales and profits of these enterprises.
Restraining the demand for crude oil in emerging economies will drag down the global economic recovery. At present, the economies of various countries are still in the recovery stage, and the sharp rise in crude oil prices will inhibit the crude oil demand of emerging economies, turning to the use of cheap and abundant alternative energy sources such as coal. At the same time, the continued rise in crude oil prices will push up the production costs of the global industrial manufacturing industry, curb corporate investment, and decline in employment and income. Rising prices will drag down the recovery of consumption. The continuous rise in crude oil prices is undoubtedly “adding fuel to the fire” of inflation in Europe and the United States. The Federal Reserve and other central banks will be forced to tighten policies, which is tantamount to “slamming the brakes” on the global economic recovery.

3. The positive impact of the continued rise in oil prices
Due to the accelerated development of new energy sources, the substitution effect of other energy sources has emerged. The impact of rising crude oil prices on different industries is different, and not all adverse effects. At present, there are still technical bottlenecks in the popularization of new energy. If the price of crude oil continues to rise, the advantages of new energy will be reflected, and the substitution effect of coal and other energy sources will also appear.
Contribute to the improvement of the ecological environment. The rise in oil prices is not without benefits. As the consumption level of fuel vehicles is getting higher and higher, it will naturally force the development of new energy vehicle technology and gradually reduce the dependence on petroleum energy. The reduction of fuel vehicle trips will reduce the phenomenon of vehicle exhaust emissions, which will also be of great benefit to the improvement of the ecological environment.
To sum up, the continuous rise in oil prices has brought a lot of pressure to people’s lives, and the impact has more harm than good. I hope that it can be adjusted in the later stage, and the state will give new policies to carry out relevant regulation. Finally, Senling Motorcyle will keep developing more oil efficient motorcycles and electrical sccoters for our loyal customers! Will you ride a motorcycle instead of driving cars to deal with the rising oil price?

Post time: Apr-06-2022

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