Iraq invades Kuwait
Operation Desert Storm begins, prompting a rise in oil prices over supply fears. Iraq accused Kuwait of stealing its petroleum through slant drilling, though it was more likely that, due to an inability to repay Iran war debts to Kuwait, Saddam Hussein chose to get the debt written off by invading the country instead. Iraq also resented the way Kuwait contrived to hold down oil prices, making it difficult to generate funds to repay the $14bn owed. Oil surged from $18 a barrel to $39 by the end of 1990, before sliding back below $20 by mid-1991.
BRIC economies fuel price rise
A combination of the 9/11 terror attack, the beginning of the Iraq war and rising demand sends oil prices higher. The west’s reaction to the terror attacks, which culminated in the 2003 invasion of Iraq, nudged prices up, but it took several years before they moved above the $35 peaks at the end of 2000. Prices were propelled upwards by a weaker US dollar coupled with rising global demand, triggered by the emerging BRIC economies of Brazil, Russia, India and China.
Financial crisis hits demand
Oil prices plunged from $147 in July 2008 to just $33 in February 2009, as the global financial crisis hit demand for fuel. The rise in oil prices in the period leading up to 2008 was driven by a number of different factors, including a weaker US dollar, and geopolitical tensions in the Middle East, Africa and North Korea. A lifting of a ban on US offshore oil drilling in the summer of 2008, followed by the collapse of Lehman Brothers in the autumn, prompted prices to suddenly go into steep decline.
US Fed initiates economic growth
A large-scale US quantitative easing programme, coupled with low interest rates, helps spur economic growth, sending oil prices sharply higher. The slashing of US interest rates, alongside the Federal Reserve’s large-scale stimulus programme, helped put a base under oil prices. The US dollar slid sharply, generating an inflationary impulse into the rest of the global economy as Fed chair Ben Bernanke strove to float the US economy off the rocks of a possible depression.
Arab Spring propels oil higher
The anti-government Arab Spring demonstrations bring further disruption to oil output, creating price volatility over supply fears. The Arab spring of 2011 pushed oil prices back above $100 a barrel, while also helping US shale producers who got wiped out in the crash of 2008 reorientate their business models to become more efficient. A pickup in Chinese demand also helped boost prices, as Chinese authorities implemented a host of stimulus measures in order to prevent a slowdown in its economy.
Trump prompts volatility
President Trump announces a renewal of sanctions on Iran, leading oil prices to rise to a three-year high of $85 a barrel. The spike to $85 was short-lived though as Trump subsequently railed against the jump in prices, as the US granted a number of exemptions to the sanctions. This prompted Saudi and the US to ramp up production – as prices slumped by 30% in Q4. The increase in production coincided with a rising US dollar and sharp slowdown in demand from China, Japan and Europe, as concerns about the health of the global economy returned.