World Crude Oil Prices have registered significant rise over the years. The price of crude oil, like any other commodity, depends on market demand and supply. The limited supply of crude oil and its huge burgeoning demand have led to rise in crude oil prices around the world. The price of crude oil is responsive to global demand and OPEC (Organization of Petroleum Exporting Countries) and non-OPEC supply. The price cycle of crude oil can be quite long extending over several years.
The severe increase in crude oil prices has become a matter of concern around the globe. It has been estimated that the supply of oil will much short of the demand in years to come. As a result, price of crude oil is expected to increase further in the coming years.
According to recent reports, world oil prices reached close to 124 dollars per barrel on 8th may, 2008. With this rise, oil prices rose by 7 dollars within a week. A number of reasons led to this rise in crude oil prices. These included the OPEC (Organization of Petroleum Exporting Countries) decision of not hiking output quotas and also market speculations.
Violence in Nigeria has been identified as another reason behind the rise in oil prices. Oil supply from Nigeria has been affected by the violence. According to Goldman Sachs, the US investment firm, world oil prices may increase to 200 dollars per barrel in the next two years.
In the United States of America, strong price regulations and price controls were used for the petroleum industry for the major part of the twentieth century. Price controls were imposed in the US on domestically produced oil between 1973 and 1981. As a result price of imported crude oil was 50% higher than that of domestically produced oil. Due to the price controls oil prices in the United States remained below the world average for a significant period of time.
According to latest available estimates of 2nd May, average price of oil per barrel of OPEC (Organization of Petroleum Exporting Countries) was 110.25 dollars while the non-OPEC average was 110.16 dollars. The total global average was 110.21 dollars per barrel.
It has often been argued that OPEC has not been successful in controlling the world crude oil prices. OPEC is often regarded as a cartel. However the organization does not impose member quotas. In the presence of member quotas, it would have been possible to increase the supply from some of the member countries. High oil prices, on the other hand, have led to higher supply from non-OPEC countries.