World oil market chronology from 2003
From the mid-1980s to September 2003, the inflation adjusted price of a barrel of crude oil on NYMEX was generally under $25/barrel. Then, during 2004, the price rose above $40, and then $60. A series of events led the price to exceed $60 by August 11, 2005, leading to a record-speed hike that reached $75 by the middle of 2006. Prices then dropped back to $60/barrel by the early part of 2007 before rising steeply again to $92/barrel by October 2007, and $99.29/barrel for December futures in New York on November 21, 2007.[1] Throughout the first half of 2008, oil regularly reached record high prices.[2][3][4][5] Prices on June 27, 2008, touched $141.71/barrel, for August delivery in the New York Mercantile Exchange, amid Libya's threat to cut output, and OPEC's president predicted prices may reach $170 by the Northern summer.[6][7] The highest recorded price per barrel maximum of $147.02 was reached on July 11, 2008.[8] After falling below $100 in the late summer of 2008, prices rose again in late September. On September 22, oil rose over $25 to $130 before settling again to $120.92, marking a record one-day gain of $16.37. Electronic crude oil trading was temporarily halted by NYMEX when the daily price rise limit of $10 was reached, but the limit was reset seconds later and trading resumed.[9] By October 16, prices had fallen again to below $70, and on November 6 oil closed below $60.[10] Then in 2009, prices went slightly higher, although not to the extent of the 2005–2007 crisis, exceeding $100 in 2011 and most of 2012. Since late 2013 the oil price has fallen below the $100 mark, plummeting below the $50 mark one year later.
This article is about a chronology of events affecting the oil market. For a discussion of the energy crisis of the same period, see 2000s energy crisis. For fuel prices, see Gasoline and diesel usage and pricing.
As the price of producing petroleum did not rise significantly, the price increases have coincided with a period of record profits for the oil industry. Between 2004 and 2007, the profits of the six supermajors – ExxonMobil, Total, Shell, BP, Chevron, and ConocoPhillips – totaled $494.8 billion.[11] Likewise, major oil-dependent countries such as Saudi Arabia, the United Arab Emirates, Canada, Russia, Venezuela and Nigeria have benefited economically from surging oil prices during the 2000s.
The difference between West Texas Intermediate (WTI) crude and Brent crude is greater if the amount of U.S. oil is high, so prices will go down in order to get the oil off the market.[12]
2003[edit]
United States crude oil prices averaged $30 a barrel in 2003 due to political instability within various oil producing nations. It rose 19% from the average in 2002.[13] The 2003 invasion of Iraq marked a significant event for oil markets because Iraq contains a large amount of global oil reserves.[14] The conflict coincided with an increase in global demand for petroleum, but it also reduced Iraq's current oil production and has been blamed for increasing oil prices.[15] However, oil company CEO Matthew Simmons emphasizes the peaking and decline of oil-exporting in Mexico, Indonesia and the United Kingdom is the reason for the price gouging. According to Simmons,[16] isolated events, such as the Iraq war, affect short-term prices but do not determine a long-term trend. Simmons cites the use of enhanced oil recovery techniques in large fields such as Mexico's Cantarell,[16] which maintained production for a few years until it eventually declined. Pumping oil out of Iraq may reduce petroleum prices in the short term, but will be unable to perpetually lower the price. From Simmons' point of view, the invasion of Iraq is associated with the start of long-term increase in oil prices, but it may mitigate the decline in oil production by retaining a partial amount of Iraq's oil reserves. As a direct consequence, the oil production capacity was diminished to 2 million barrels (320,000 m3) per day.[17]
2009[edit]
In January 2009, oil prices rose temporarily because of tensions in the Gaza Strip.[46] From mid January to February 13, oil fell to near $35 a barrel.[47]
2010[edit]
On May 21, 2010, the price of oil had dropped in two weeks from $88 to $70 mainly due to concerns over how European countries would reduce budget deficits; if the European economy slowed down, this would mean less demand for crude oil. Also, if the European economic crisis caused the American economy to have problems, demand for oil would be reduced further.[48] Other factors included the strong dollar and high inventories. According to the U.S. Energy Information Administration, gas prices nationwide averaged $2.91 on May 10, dropping to $2.79 two weeks later. The Deepwater Horizon oil spill was not a factor in gas prices since the well had not produced.[49]
Prices rose back to $90/barrel in December 2010.[50] The US average for a gallon of 87 octane regular unleaded averaged $3.00/gallon on December 23, sparking fear of a second recession if prices reached $100/barrel and $4.00/gallon gasoline, as forecasted for spring 2011. The price increases in December were based on global demand and the Arctic blasts affecting North America and Europe.