* OPEC deal started when the organisation introduced record output cut after 2008 crisis
* Oil supplies remained relatively high despite fluctuations throughout 2012 and 2013
* In 2014, crude prices reached 4-year low, but OPEC members continuing to pump oil
* In January 2016, crude hit an 11-year low, reaching $53 a barrel
Members of the Organization of Petroleum Exporting Countries (OPEC) meet today in Vienna to decide on a deal to curb oil production, as oversupply has caused a glut in the market for more than a year now.
But how did we reach here? Below is a timeline of the important events that drove oil prices up to record highs, then down to the ground and where was OPEC amid all of it.
2008 – Record output cut announced
In 2008 US crude prices broke the $100 a barrel barrier and in July prices reached an all-time high of $142.27.
This high price concerned Saudi Arabia who called for an emergency meeting and promised to pump as much oil as demanded by customers, causing a dispute among members as it looked to extend the age of oil although poorer members of the organisation demanded cuts to boost prices.
Over the next few months, a collapse in the world economy and oil demand pulled prices to as low as $30 a barrel. In response to this, OPEC announced a record output cut in Oran, Algeria.
2009 – Trading $70-$85
This was the price range by late 2009 because, following the Oran meeting, producers maintained an output ceiling of 24.84 million barrels per day for it 11 members with output curbs.
But member countries started to slowly and unofficially increase production again, ignoring the agreed limit.
Throughout 2010, prices continued to fluctuate but with did not experience record highs or lows.
2011 – Political turmoil drives oil upwards
Oil did not return to $100 a barrel until political instability hit Libya, Egypt, Bahrain and Yemen. Oil supplies remained relatively high despite fluctuations throughout 2012 and 2013.
2014 – Pump-at-will policy
In 2014, crude prices reached a four-year low, but, instead of orchestrating organised production control within OPEC, members adopted a policy of continuing to pump as much oil as they wanted and they waited for the market to shun high-cost producers and eventually balance out. This policy also aimed to protect OPEC members’ market share against increasing US shale oil supplies.
2015 – Dipping point
The market was definitely shocked by the step back taken by OPEC, spearheaded by Saudi Arabia. Brent crude dipped below $50 in January. Productions continued as usual as oil glut fears persisted and prices continued to drop.
2016 – Facing reality
In January 2016, crude hit an 11-year low, reaching $32.53 a barrel for the first time since 2009. On January 12, in its seventh losing day, crude oil dropped below $30 for the first time since December 2003, and by January 20, Brent crude hit $27.10 a barrel and later dropped to roughly $26.
Besides the natural glut in the market due to regular production over the past years, Iran had by then started making a comeback to the international markets, after it struck the nuclear deal with six nations of the world and had major economic sanctions lifted, it was natural to expect more supply in the oil market.
At that point, OPEC was ready to cooperate on reaching lower productions, its first output cut deal since 2008. OPEC agreed on an outline of a deal that aims to cut production to range of 32.5 to 33 million barrels a day.
Observers had been on the lookout for statements and production levels from OPEC members as well as non-OPEC producers, such as Russia and Iran, while keeping an eye on market fluctuations, all of which built up to Wednesday’s (today’s) meeting, when the world awaits to learn whether OPEC will agree to execute the production cut or not.