News

December 24, 2008

One Of The Most Volatile Years Ever For Oil Meant Testing Times For OPEC

By Eithne Treanor

The highs and lows of the oil price dominated market sentiment throughout 2008. OPEC ministers met more often and held more frequent consultations, as market conditions swept prices to record highs in the first six months and financial and economic gloom dragged prices to worrying lows for the latter half of the year. Throughout this volatile year, OPEC continued to supply the market with the oil it needed, but found an overhang at the end of the year and from September cut 4.2 million barrels out of production. The price continued to hover below US$40 come end of year.

Analysts agree this was probably one of the toughest years for OPEC as the fear of a US recession was already evident in January when 2008 kicked off with WTI at US$100 dollars a barrel. OPEC expanded its membership to re-submit Ecuador and Angola also joined the organisation. Oil prices continued a steep climb till July, hitting above US$147, a price driven mainly by speculation in the market. Such rampant market activity came as a surprise to the experts. If you go back five or ten years in...