Miton's Jane: The consequences of a falling oil price

Miton Group's investment manager David Jane (pictured) looks at the reasons for the falling oil price and the consequences on wider economy, as oil drops to $77 a barrel for the first time in four years.

We, like many others, have been surprised at how the oil price has been so weak, despite the current escalation of problems in the Middle East. To some degree, this can be explained by the growing level of energy independence that the US is achieving as a consequence of shale oil and gas fracking. At the same time, it could be argued to be a consequence of the global economy being slightly weaker than expected, or Saudi Arabia and other OPEC members producing great amounts. It has been said that Saudi Arabia needs an oil price over $70 to not run a budget deficit. Of course, they ...