The chart displays the development of oil prices within a period of twenty years, to be exact, from 1974 up to 1994. What the chart to be discussed is especially featured with focuses on the fact that extreme „ups and down“ are marked through specific historical events with the help of which the respective „status quo“ of oil prices can be understood or explained and economically categorized more easily. On the whole, there are both tendencies of extremely increasing and decreasing oil prices to get registered.
In 1974 the price for one barrel crude oil was at 10.41 dollars, the prices getting continually increased were at 13.03 dollars in 1978 and at 29.75 dollars only a couple of years later due to the Iranian Revolution under the future Khomeini regime of Islamic fundamentalists resulting in the Western democracies‘ economic position on the oil market getting more and more weakened and consequently becoming worse what meant they had to pay even more in late 1980 (36.15 dollars per barrel) when the oil crisis got combined with the world recession at its hight.
In the following years the situation improved a bit again – from the „Western point of view“ the price in mid 1982 was only a bit more than 30 dollars again which was due to Mexico, Norway, Great Britain, the non-OPEC oil countries, having successfully increased their output.
There are two further historical milestones involved in 1986 with the OPEC being in disagreement with each other (fighting for their share of the market) and in 1990 with Iraq (under Saddam Hussein’s regime) having occupied Kuwait. Those historical events deliver us with arguments apt to explain the specific „status quo of oil prices“ in 1986 and in 1990 … with Iraq having occupied Kuwait resulting in western democracies‘ position on the oil market getting logically decreased again, i.e., they had to pay higher oil prices.
The economic rules of offer and demand on the market hereby are distinctively determined by political power and influence and the decisive possession of oil resources.