Oil Prices: Already Peaked?

Horn, Manfred
September 2003
Economic Bulletin;Sep2003, Vol. 40 Issue 9, p309
Academic Journal
Since the beginning of 2000, crude oil prices have mostly remained within the Organization of Petroleum Exporting Countries (OPEC) target range of between US$22 and 28 per barrel. In mid-December 2002, strike-related production losses in Venezuela caused oil prices to climb above the upper limit of this range, and by mid-March the risk of war in Iraq had led them to rise further to a hefty US$34 per barrel. Although world economic growth remained weak, world oil consumption showed a significant year-on increase in the first half of 2003. Oil consumption declined in China, largely as a result of the consequences of the Severe Acute Respiratory Syndrome (SARS) epidemic. Despite the low level of stocks, crude oil prices fell at the end of the Iraq war. In order to avoid a further drop in prices, OPEC decided to reduce production on April 24, 2003. The International Energy Agency forecasts that world oil consumption will increase between the second and fourth quarters of the year. If these expectations are fulfilled, then OPEC crude oil production would be necessary to cover world oil demand in the third and fourth quarters.


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