Huitong Network News - After two and a half years of slump, oil prices may have experienced an earth-shattering reversal. Some experts claim that the global economy may experience serious oil shortages in the next few years. This would mean a sharp rise in the prices of crude oil, gasoline, transportation, plastics, and even food.

Meanwhile, Saudi Aramco and its OPEC partners in the Persian Gulf region will regain the hegemony of global oil producers. In short, the oil shortage will impact the global economy, and this is entirely the fault of investors.

It could also mean that Saudi Aramco and its Persian Gulf partners will move to the world's most powerful oil producers. Overall, the world economy may be impacted by the dawn of oil shortages, and this is entirely made by investors.

Investor activity could cause oil crisis

OPEC, shale oil producers, Royal Dutch Shell, Chevron, and British Petroleum all know very well that the oil industry is not that profitable now compared to oil prices that exceeded $100 per barrel three years ago.

Today, the price of oil is around $50 per barrel. For these international oil companies, it is prudent to cut costs and wait for oil prices to bottom out. They achieved this goal by cutting back on exploration and developing new oil projects, which are very capital intensive.

These international oil companies have been working to cut costs for almost two years, and now they are being pressured by some hedge funds and other institutional investors to keep these costs low.

However,hedge fundsThe demands of these international oil companies and other institutional investors are extremely dangerous to them and to the long-term economy.

International Energy Agency Executive Director Birol recently warned that global investment in the energy sector is still declining. The global energy sector spent 12% less than last year, which is a significant drop.

From the perspective of energy consumers, Birol said, “To avoid major supply disruptions until 2020, we need a miracle. Saudi Arabia's oil minister Falih made a similar warning at the 2017 Cambridge Energy Research Association conference in the US.

Misleading predictions of peak oil demand and stagnant oil resource extraction could hinder the trillions of dollars needed to support essential oil and gas suppliesUSDInvestments. Countries like Saudi Arabia will benefit if these warnings come true.

Institutional investors are watching a company's stock price today and tomorrow. What they need most is a quarterly return. hedgingfund managerThey don't focus on long-term prospects because they plan to quit investing at that time.

While oil company executives were pressured to keep costs low in order to impress investors during next quarter's earnings call, they were also forced to ignore long-term investments, which would ensure the health of the company and the economy.

For those who think that electric vehicles will make up for the lack of oil resources, it is a bit too urgent to have an unproven technology meet such a large economic demand as quickly as possible.

Even countries such as the United Kingdom, which claim to require the adoption of electric vehicles, have set the time frame for this plan only 20 years from now. No one knows when battery technology will adapt to long-distance driving, which is common in the US.

For those who are optimistic about shale oil, its extraction volume and production costs do not indicate its ability to replace oil.

For the world economy, betting that no more oil will be needed for the next few decades would be a huge gamble. Currently, the world'scrudeOversupply. Countries such as China and Japan have been hoarding oil, while US oil stocks are still 25% above the five-year average, despite a recent decline.

However, that will change because everything in the oil industry will change. At some point in a few years, the world will need more oil production.

If Exxon, Shell, Chevron, British Petroleum, and others are not sufficiently prepared, oil production may be insufficient. And up to that point,hedgingFundRadicalism, however, cannot be used to run the oil business.