The 2015 Oil Price Crash: What Caused It
In 2014 and early 2015, the price of crude oil was hovering around $100 per barrel. However, by the end of 2015, the price had dropped to less than $40 per barrel. This dramatic decline in oil prices caught experts off guard and left many wondering what caused the crash. In this article, we will explore the factors that contributed to the 2015 oil price crash.
Overproduction And A Glut In The Market
One of the main factors that contributed to the 2015 oil price crash was a significant increase in the supply of oil. The United States had been experiencing a shale oil boom, which led to an increase in the amount of oil being produced. Additionally, OPEC (Organization of the Petroleum Exporting Countries) decided not to cut production in an effort to maintain market share. This led to a glut in the oil market, with more supply than demand, which in turn led to a decrease in oil prices.
Slowing Global Economic Growth
Another factor that contributed to the oil price crash was slowing global economic growth. The global economy was still recovering from the 2008 financial crisis, and many countries were experiencing slow growth. This led to a decrease in demand for oil, as industries and transportation sectors were not consuming as much oil as they had been.
The Strong U.S. Dollar
The strong U.S. dollar also played a role in the 2015 oil price crash. Oil is traded in U.S. dollars, so when the dollar is strong, it makes oil more expensive for countries that use other currencies. This can reduce the demand for oil and lead to a decrease in prices. In 2015, the U.S. dollar was experiencing a period of appreciation, which made oil more expensive for many countries and further contributed to the decrease in demand.
Conclusion
The 2015 oil price crash was caused by a combination of factors, including overproduction and a glut in the market, slowing global economic growth, and a strong U.S. dollar. These factors all contributed to a decrease in demand for oil, leading to a drop in prices. Although the crash was unexpected, it serves as a reminder of the complex and ever-changing nature of the oil market.
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