The cost of a barrel of marker grade oil has a significant impact on the economies of leading countries and can be used as a political tool. The reduction in prices negatively affected the economy of the Soviet Union, playing one of the decisive roles in the political crisis, which played out in the late 80s and triggered the collapse of the USSR. Fluctuations in the cost of a resource affect the state of the budget of modern Russia, the economy as a whole, and the price of another important element of Russian exports - natural gas.
The price of oil is often compared with the figures for 2008, when, due to the global economic crisis, a price collapse occurred. At the same time, the historical maximum value was recorded. How much did oil cost in 2008? The cost of the resource reached its minimum mark the day after Catholic Christmas, while the maximum price was fixed several months earlier - on the fourth of July.
The dynamics of oil prices is an indicator that reflects many events in the political arena and has an impact on leading global economies. But before you trace the fluctuations in the cost of a resource, it is worthwhile to understand the types of prices, cost, and the order in which the final cost is formed.
Types of Oil Prices: Marker Resource Varieties
To simplify the trading process, it is customary to use several reference (marker or standard) types of oil. The cost of most varieties of the resource directly or indirectly depends on market prices formed on the following basic varieties:
- Dubai / Oman (as well as Oman Crude since 2007) - mainly sold in Asian markets.
- Brent Crude Oil - produced on the coasts of Norway and Scotland, consists of several types of raw materials. The exemplary grade is the gold standard for determining the cost of oil in the markets of Europe and OPEC countries. According to oil quotes, Brent is forming the price for the domestic brand Urals.
- West Texas Intermediate (also known as WTI) is Texas oil, the value of which is formed when the resource is delivered to storage facilities in Oklahoma, USA.
The volumes of production of the listed grades of oil are small in a comparative ratio, but they determine the cost of most supplies of other grades.
The cost of a resource per unit volume
The dynamics of oil prices takes into account the final cost of the resource, which consists of the margin and cost - the total monetary value of the costs that companies incur in oil production. The cost consists of the following components:
- Production costs, taxes and other mandatory deductions (the fee is from five to ten dollars per barrel).
- Expenses for the search and development of oil fields (depending on the region, the costs range from seven to forty dollars).
- Transportation costs (the factor is not always taken into account, but only as necessary).
- Offshore fields, which comprise about thirty percent of total global oil production, may additionally require decommissioning of the oil platform.
The average cost of oil production is estimated at twenty-nine dollars per barrel. How much did oil cost in 2008? With a minimal drop in the cost of the resource, oil producers earned only four dollars on one barrel, while at the peak of prices the profit reached one hundred dollars or more.
Final oil price formation
Final oil prices (a table for comparison or a graph, as a rule, reflects the final price) are formed under the influence of several factors. The current political and economic situation is taken into account, but the ratio of supply and demand remains the fundamental factor determining the cost by 80-85%. Such a conclusion in a scientific work entitled "Study of the features of the formation of oil prices …" was made at the INEI of the Russian Academy of Sciences.
So let's look at what the price of oil was over the years. The graph will help to clearly demonstrate the situation. The data are given from the second half of the nineteenth century until 2011. On the chart, by the way, the price of oil in 2008 is clearly visible - the drop is easily distinguished.
The blue line shows the cost of the resource in United States dollars, the orange curve shows the price level in 2015 dollars. The data before 1945 relate to the cost of oil in the United States, until 1885 the Arabian Light brand was presented, and after - today's benchmark, the resource of the Brent brand.
Growth in the cost of a resource in the early 2000s
The price dynamics, which was agreed upon by world experts, began in the 2000s, when oil prices rose as a result of the Iraq war, rising demand, reduced production by Indonesia, the UK and Mexico, as well as depletion of reserves in the Persian Gulf countries. The instability of the situation in the Middle East caused oil to rise in price by ten dollars per day on June 6, 2008. By July 4, the cost of the product reached almost 144 dollars per barrel (143.95).
The global crisis and the collapse of 2008
How much did oil cost in 2008? The cost of the resource by December 26, 2008 reached almost thirty-four dollars per barrel. The low price of oil in 2008 did not last long: in the summer of 2009, the price began to increase again.
Price stabilization after crisis recovery
After overcoming the global financial crisis (by 2010), the level of oil prices stabilized. The cost of a barrel at that time was about seventy to eighty dollars. Growth resumed due to the political crisis in Libya and a fire at a US refinery, then the price began to fall due to problems in the European Union.
The collapse of the oil market due to an oversupply of raw materials
In 2014, the price of Brent fell below ninety dollars per barrel. Demand for fuel fell, and at the same time an excess supply arose. By early January 2015, the price of oil fell significantly. The minimum mark of 45.13 dollars per barrel indicator reached the thirteenth of January. How much did oil cost in 2008 and 2015? These are quite comparable indicators. And the factors that caused the decline in prices are comparable - in both cases the decisive influence was exerted by the global economic situation.
