Arab Today, arab today oil shocks and price swings
Last Updated : GMT 03:23:48
Arab Today, arab today
Arab Today, arab today

Oil shocks and price swings

Arab Today, arab today

Arab Today, arab today Oil shocks and price swings

Ample supply of crude oil pushed prices down by more than 30%
Paris - AFP

-  The oil price roller-coaster:

- 1973: Yom Kippur war and first oil shock -

On October 16, 1973, 10 days after an Egyptian-Syrian offensive is launched against Israel, six Gulf OPEC members raise oil prices by 70 percent. It is the first time since the cartel was formed in 1960 that crude producers hike prices without an agreement with major oil companies.

Using oil as a political weapon, they also decree an embargo against Western countries considered pro-Israeli, causing prices to jump and triggering an unprecedented global oil crisis.

By December, a barrel of crude costs $11.65 (the equivalent of about $60 in January 2016) or four times more than in September.

- 1979: Fresh panic -

Facing the combined effects of Iran's  Islamic revolution and the subsequent 1980-1988 Iran-Iraq war, global crude production declines, fuelling a fresh surge in prices.

By late 1979, the second oil shock boosts prices to $40 a barrel (almost $127 in 2016).

Consumer countries react by promoting energy conservation and diversifying sources.

- 1986: Price war -

Amid a global economic slump, crude prices fall from December 1985 through late 1986 despite several output cuts because OPEC cannot get non-member countries to go along.

Kuwait and Saudi Arabia unleash a price war by opening their oil taps and flooding the market. The price plunges to just $8.0 ($17 in 2016) and forces non-OPEC members to curb production.

Prices climb to just above $40 in late 1990 (about $71) just before the Gulf War breaks out.

- 1997: Output surge -

In November 1997, OPEC raises output by 10 percent, without taking the Asian financial crisis into account. Prices slump 40 percent, and dip below $10 ($14.5) at the end of 1998.

OPEC struggles for nearly a year and a half to sort out its mess, slashing output even as demand bounces back. In September 2000, traders pay $32 (almost $44) a barrel.

- 2004-2007: Geopolitics and Katrina -

From mid-2004, oil prices jump owing to a troubled geopolitical environment that includes attacks on production sites in Iraq, increased turbulence throughout the Middle East, and social unrest in Nigeria and Venezuela, two big oil producers.

In October 2004, the price shoots past $50 (over $62) and spikes to more than $70 ($84) in August 2005 after Hurricane Katrina slams into oil facilities in the Gulf of Mexico. The surge is dubbed the world's "third oil shock".

- 2008: All-time record at $147 -

In January 2008, oil breaches the psychological $100 ($112) barrier owing to a fall in US crude stocks and strong economic growth in China.

In the following months, prices climb further as the US dollar falls against key currencies. Most oil deals are done in dollars.

On July 11, the price of crude reaches a record high of $147 ($157.5).

- 2008-2009: Subprime crisis -

Within a period of five months, oil prices plunge by two-thirds, hitting $32 ($36) in December 2008 during a severe global economic recession triggered by a crisis in so-called subprime loans in the United States.

- 2011: Libyan conflict -

The suspension of Libyan output amid a civil war drives prices up by 35 percent between January and March, to $127 (almost $135).

A second peak comes in February 2012 after Europe slaps an embargo on Iranian crude.

- 2015-2016: New slide -

Ample supplies push prices down by more than 30 percent in 2015 and by another 20 percent at the start of 2016.

A barrel now fetches just $30 as demand has fallen off and Iranian supply comes back online after sanctions are lifted.

 

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