Instability of trade in petroleum and petroleum products

Until 1970, the world oil prices never rose higher than US$ 2 a barrel, although oil products were sold at prices several hundred percent above cost. In the 1970s and 1980s, OPEC countries raised the per barrel reference prices from less than US$ 2.00 to $34.00. Since 1979, OPEC's market share has dropped from 63 to 38% of world oil sales. Oil production has grown enormously in China, Latin America and Northern Europe while it has halved in the Middle East. The role of the Arab oil-producing countries and the importance of the Straits of Hormuz to the world economy has dramatically declined not only because of the Iran-Iraq war, but also because of the rapid development of non-petroleum-based sources of energy. The present oil glut has caused production or price roll backs in OPEC and in non-OPEC producers such as the former Soviet Union, Norway and the UK. Oil prices may stabilize around $20-25 a barrel in the 1990s.