56
39
th
Annual Report
Fluctuations in dollar exchange rates (currency of oil pricing in
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world markets) against major currencies, especially in the middle
of the year (after a significant decline in the exchange rate of the
Euro due to fears of the Greek crisis), can be considered as one
of the main factors behind the decline in global oil prices during
the month of June indicating the traditional inverse relationship
between oil prices and the exchange rate of the dollar.
Despite of the measures taken in some industrialized countries to
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avoid both the fluctuation in the prices and excessive speculation
in the market, speculation activities played a role in the high level
of fluctuation in oil prices during the year. In general, the price
movement pattern in recent years which is linked to speculation
activities and financial factors, continued to push prices up to
high levels that cannot be justified by market fundamentals.
There is no doubt, that the aggravation of geopolitical events in
the Arab region was a fertile ground that has helped in increasing
the activity of speculators.
One of the main motives behind the rise of daily rate of OPEC
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basket price was the seasonal factors related to weather, especially
mild winter conditions in the northern hemisphere which lasted
until the end of 2012. Most notably, the hurricane of Sandy
which hit the east coast of the United States during the month of
October causing great damage to refineries and power plants, in
one of the world’s largest energy consumption regions.
Year 2012 also saw significant developments in the pattern of
price differentials, where the differentials between light sweet crudes
and heavy sour crudes narrowed to unusual levels compared with
previous year. For example, the differential between Dubai crude
(representing the heavy crudes) and Brent (representing light sweet
