Reasons Behind the Recent Oil Price Drop

The benchmark U.S. petroleum price has plunged more than 25% since June, trading below $80 a barrel thanks to America’s production boom and the recent decision by Saudi Arabia to cut its prices to regain market share.

U.S. crude oil production has reached a level not seen since 1986; North Dakota now produces more oil than Libya. Other reasons for lower prices: Increasing energy efficiency in the West, production increases in Russia coupled with economic slowdowns in China and Western Europe, plus the inability of OPEC members to agree on production cutbacks.

A further decline in prices would create a disincentive for drillers, but recent reports indicate the market may snap back.