Crude Oil Then and Now

Everyone knows Crude Oil is the world’s most traded commodity, but how did it get to be so popular? The article below covers the history of crude oil and highlights some of the major events that influenced its price and made it so popular.

It all began in 1859 when Edwin L. Drake and George Bissell successfully used a drilling rig at a site near Titusville, Pennsylvania. Nearly 40 years later, in 1901 Capt. Anthony Francis Lucas found oil near Beaumont, Texas.

In 1938 oil was also discovered in Saudi Arabia and Kuwait. The largest oil field in the world is Ghawar Field in Saudi Arabia.

In 1956 oil was also discovered in Nigeria and Algeria. At the same time Europe’s oil supply was cut off as a result of The Suez Crisis, which also threatened French and British stock holdings in the Suez Canal Company.

In the year of 1960 OPEC (Organization of the Petroleum Exporting Countries) was formed by Iraq, Iran, Venezuela, Kuwait and Saudi Arabia. The Arab Oil Embargo on the US in 1973 cause oil prices to rise from $2,90 to $11,65. After Iraq’s invasion of Iran in 1980 Oil prices increased to $35 per barrel. Another spike of Oil prices happened in 1990, caused by the Gulf War. After the continued rise in Oil prices, they begin to descend in 1997 due to the Asian economic crisis.

In the period after September 11th 2001 the U.S oil imports increased reaching the record point of 11.3 MMBO (million barrels of oil) per day in July 2004. Oil prices hit a record high of $78.40/bbl on NYMEX (New York Mercantile Exchange) in 2006.

In 2008 Oil price fluctuations caused prices to rise to a high of $147.27 per barrel in July only to plummet down 78.1% by December of the same year, due to the global financial crisis.

By 2015 Oil prices stabilized around $50 a barrel and predictions are that prices will continue to rise in the coming years.