Crude oil is one of the main market drivers across the world, and according to experts, its current rise could help the region recover faster from the financial crisis.
May 25, 2009 4:27 by Aarti Nagraj
Since hitting a record high of $147 a barrel last July, crude oil prices have fallen rapidly because of the global economic slowdown, which forced businesses and consumers to reduce spending. Prices reached around $34 a barrel in December last year.
But the US dollar’s value has been reducing, and since crude oil is traded in dollars around the globe, when the dollar softens, oil prices rise. The Organization of Petroleum Exporting Countries (Opec) has also enforced production cuts, and fear of violence in Nigeria threatened supply, all of which have led to the oil price increasing.
However, according to the IAE, investment in oil and gas exploration and production this year has fallen 21 percent, or almost $100 billion, due to the economic crisis. The IEA said that between October 2008 and the end of April this year, over 20 large-scale oil and gas projects, valued at around $170 billion were postponed indefinitely or cancelled. And these projects involved around 2 million barrels per day (bpd) of oil output.