The largest collapse in the oil market

US, WASHINGTON (ORDO NEWS) — Brent oil futures during trading on the ICE exchange in London continued to fall and fell by almost 15%, the price at the peak fell to $ 24.52 per barrel (for the first time since 2003).

About the largest (from 15%) collapses in the oil market.

Gulf War (1991) – 30% daily drop

The largest drop in oil prices in modern history occurred during the Gulf War. Due to Iraq’s invasion of Kuwait and the ensuing problems with the supply of raw materials, from July to October 1990, the price of oil rose from $ 15 to $ 41.15 per barrel. However, a substantial correction in the price of oil quickly followed: in particular, on October 22, quotations fell by 17% – from $ 33.3 to $ 27.45 per barrel. On January 17, 1991, US President George W. Bush announced the launch of the Desert Storm military operation against Iraq. At the same time, he ordered the Strategic Oil Reserve to be printed out to compensate for the deficit in the domestic market. On January 17, exchanges reacted with a sharp decline in prices – from $ 30.28 to $ 21.1 per barrel.

Termination of the OPEC + Agreement (2020) – 24% drop

On March 9, 2020, futures for Brent crude during the trading on the ICE exchange in London collapsed by more than 30%, the price at the peak was reduced to $ 31.02 per barrel. This happened against the background of news that OPEC + countries, following the results of negotiations in Vienna on March 5-6, could not agree on an additional reduction in oil production amid falling demand due to the spread of coronavirus. Quotations grew a bit during the day, by the end of the day the total drop was 24% – up to $ 34 per barrel.

Correction after terrorist attacks in the USA (2001) – daily drop of 18%
The terrorist attacks in the United States on September 11, 2001 caused a panic on the exchanges and a short-term increase in quotations from $ 27 to $ 31 per barrel. Fears that the terrorist threat could lead to a recession and a decrease in demand for fossil fuels (including due to a decrease in air transportation), led to the fact that on September 24 oil fell sharply by 18% – from $ 25.2 to $ 20.6 per barrel . Oil was able to recover up to $ 25 only by mid-2002.

Crisis of oil overproduction in 1986 – daily drops to 17%

The year 1986 saw the peak of the crisis of oil overproduction. This event was preceded by a decrease in production by OPEC member states. Trying to keep oil quotes at the same level (above $ 30 per barrel), the cartel set quotas. In April 1982, OPEC first limited production to 17 million 350 thousand barrels per day and then gradually reduced it to 15 million barrels. Saudi Arabia deliberately underestimated its rate by reducing production to 1.5 million barrels per day with a quota of 4.35 million barrels.

However, this led to the fact that other oil-producing countries occupied the OPEC niche. In particular, the USSR became one of the leading oil exporters. Prices fell to $ 25 a barrel. In January 1986, Saudi Arabia decided to sharply increase production by almost double the quota – up to 10 million barrels per day, in order to eliminate competitors due to its cheap oil, who could not sell fuel below cost. On January 20, oil fell in price by 10%: from $ 23.63 to $ 21.33 per barrel.

Then, over the course of the year, eight more daily falls of more than 10% were recorded. The largest happened on July 22: then the oil price fell 17% from $ 13.07 to $ 10.88 per barrel. Subsequently, stabilization of prices followed up to $ 15-20 per barrel. The fall in oil prices and the decrease in export foreign exchange earnings from the sale of energy carriers was one of the reasons for the aggravation of the economic crisis and the subsequent collapse of the Soviet Union. 88 per barrel. Subsequently, stabilization of prices followed up to $ 15-20 per barrel.

A drop in oil prices and a decrease in export foreign exchange earnings from energy sales was one of the reasons for the aggravation of the economic crisis and the subsequent collapse of the Soviet Union. 88 per barrel. Subsequently, stabilization of prices followed up to $ 15-20 per barrel. The fall in oil prices and the decrease in export foreign exchange earnings from the sale of energy carriers was one of the reasons for the aggravation of the economic crisis and the subsequent collapse of the Soviet Union.

World financial crisis (2008) – daily drops to 15%

In the fall of 2008, a financial crisis began in the world. It was caused by a “bubble” in the US real estate market. In 2007-2008, international investors began to get rid of mortgage bonds and buy other assets, such as oil futures, which led to a speculative rise in oil prices, first to 100, and then to $ 140 per barrel. On September 15, 2008, one of the largest American investment corporations, Lehman Brothers, filed a lawsuit with bankruptcy, which failed to cope with a large amount of “bad” debts. Its collapse led to problems for all major global financial corporations, which, in turn, provoked a recession and a drop in energy demand.

On September 26, oil fell below $ 100 per barrel, and on November 17, below $ 50. The largest drop in quotations occurred on December 5, when oil fell by 15%, from $ 43.83 to $ 37.04 per barrel. At the lowest level, oil traded on December 26 – $ 33.73, followed by slow growth.

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The article is written and prepared by our foreign editors from different countries around the world – material edited and published by Ordo News staff in our US newsroom press.

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