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 The last decades were for the most part of commodities a very unstable one, with large swings from shortage periods to intense oversupply intervals. Oil was no exception, so in the last thirty years we have seen it all.
Back in the mid 1980s, OPEC and all the rest of the oil producing countries agreed to set lower production quotas to balance the oil price. Most OPEC members failed to respect the agreement, causing disputes between them and the non OPEC oil producing countries.
During these turbulent times, Saudi Arabia dramatically reduced it’s own production in a desperate attempt to stop the free fall of crude oil prices on the global market. Eventually, tired of being the only ones that cared, Saudi Arabia decided to increase production by 250% in 1986. This move caused a dramatic fall of the crude oil price reaching a low below $10 per barrel. Because of a low production period and the uncertainties regarding the Gulf War, the oil’s value started to increase, but after the Kuwait’s liberation the quotes started a new decline, reaching a new lowest in 1994. By 1997, the oil was back up, due to the consumption growth on one hand and to the declining Russian production on the other hand. In 98-99, the Asian crisis and another increase in the OPEC production drove the oil price on another down trend. In 1999 the two consecutive decisions to reduce the OPEC oil production boosted the oil price to over $25 per barrel. In 2000 began the “SUV era” so the oil consumption increased again dramatically, causing the prices to go higher and higher. The September, 11th, 2001, terrorist attack hit the oil price hard, causing a downfall of 35% in just 2 months. After another OPEC cutting intervention in 2002, the oil price stabilized at $25 per barrel once again. Later, the price entered a rising trend that also was supported by the Iraq War, Asian growth and weaker dollar, reaching a record high of over $140 per barrel in 2008. After that boom, the crude oil price entered a steady down trend, going down to $35 in February 2009, but rising up shortly to $56 per barrel in May 2009. After small fluctuations in the past year, the crude oil price is currently moving around $80 per barrel. |
