A record rise was seen in the prices of crude oil on Monday. Both American crude and crude oil of Gulf countries crossed $ 119 per barrel. During the trading session, the prices of both types of crude oil have seen an increase of about 30 percent. This increase has been seen due to the interruption in the supply of crude oil due to the Middle East War. Iran has closed the Homurz Strait. Due to which 20 to 25 percent of the global oil supply is not reaching the market. Due to which there has been a tremendous increase in the prices of crude oil. Many producers in the Middle East have already reduced supplies. There was a reduction in LNG shipments from Qatar due to the fighting. After that Iraq and Kuwait have also reduced oil production.
Experts have warned that UAE and Saudi Arabia may soon take similar steps. Its storage capacity is approaching its limit. Over the past two decades, the crude market has seen repeated booms and busts, driven by wars, sanctions, economic recessions and changing patterns in global demand. There was a time when buyers were even getting money for purchasing crude oil. Let us also tell you what kind of journey crude oil has seen in the last two decades.
2022: Russia-Ukraine War
Crude futures were last seen above $100 per barrel in February 2022, when oil and gas producer Russia attacked Ukraine. By March 2020, crude oil prices were near record highs set in 2008. Brent crude rose to $ 139.13 per barrel, while West Texas Intermediate (WTI) fell to $ 130.50 per barrel. Due to the imposition of sanctions by Western countries on Russia, concerns about the lack of global supply also increased. Also, demand increased due to the recovery of the global economy after the Covid-19 pandemic. Due to these reasons, prices remained above $100 until the summer of 2022, then due to excess supply, prices started falling again.
2020: When buyers got money for buying oil
Who can forget the era of 2020? This was the period when the chaos of Covid was being seen all over the world. All the factories of the world were closed. Air travel was at a standstill. Due to non-consumption of petrol and diesel, the demand for crude oil had become negligible. The market was further shaken due to shortage of storage and price war between Saudi Arabia and Russia. In April 2020, WTI prices fell to minus $40.32 per barrel. After which the producer gave money to the buyers in exchange for carrying the oil with their hands. During the same period, the price of Brent crude had reached a record low level of $15.98.
2012: Prices cross $100 due to restrictions
Oil prices first fell below $90 during the Eurozone economic crisis, but oil prices made a strong comeback in 2012. The surge came after Western powers imposed economic sanctions on Iran, including a ban on crude oil exports, to curb its nuclear program, which has long been a source of tension between Washington and Tehran. At the same time, major tensions in the Middle East, particularly the conflict in Syria, helped keep prices almost consistently above $100 through 2014. Later at the beginning of the next year the prices fell below $50. The reason for which was the increase in American shale oil production.
2011: Arab Spring fueled the boom
In 2011, political turmoil in the Middle East and North Africa also shook the oil market. Brent crude rose to $127 a barrel in March that year, when the Arab Spring uprisings ousted longtime leaders in Tunisia, Egypt and Yemen. Unrest spread across the region, particularly in Libya, a major oil producer, raising concerns about supply disruptions.
2008: When crude oil broke all records
The biggest boom in the history of the oil market came in 2008, when crude oil prices reached an all-time high. On July 11 that year, Brent crude oil reached a record high of $147.50 per barrel, while earlier in the year it had crossed the $100 per barrel level for the first time. On the same day, West Texas Intermediate reached its all-time peak of $147.27 per barrel.
This surge in prices was due to reduction in crude oil stocks in America, heavy demand from China and political instability in major oil producing countries like Iran and Nigeria. Apart from this, the weak US dollar also provided support as it made dollar-denominated crude oil cheaper for buyers using other currencies, thereby increasing demand. However, this boom did not last long. As the Global Financial Crisis caused a severe recession worldwide, demand declined and by December 2008 the price of Brent crude fell to around $36 per barrel.
Why was the memory of the crisis of 1970 remembered?
According to experts, the current situation has reminded them of the oil crisis of the 1970s. When there was a huge increase of 300 percent in the prices of crude oil. After the 1973 Arab-Israeli War, OPEC members reduced oil production. After which international oil companies had to increase the prices of oil. Besides, oil supply to countries supporting Israel was also stopped. Due to which the price of crude oil increased by 300 percent from 3 per barrel to 12 dollars per barrel. This is considered the worst oil crisis in history so far.