Oil Price History—Highs and Lows Since 1970

Historically, oil prices remained stable until the 1970s. Since then, political, economic, and other changes have rocked the oil landscape. In 2020, the coronavirus pandemic sent prices plummeting.

Global oil prices generally ranged between $2.50 and $3.00 a barrel until 1970. That's about $17 to $20 a barrel when adjusted for inflation. The United States was the world's dominant oil producer at that time. It regulated prices. Domestic oil was plentiful. Cheap oil and gas made the expansion of interstate highways, interstate trucking, and auto ownership part of the American Dream. But multiple changes have occurred since then.

In 1960, Saudi Arabia and other foreign oil-exporting nations formed OPEC. They wanted more control over their most valuable natural resource. In 1971, regulators allowed U.S. companies to pump as much oil as they wanted. They began using up surplus reserves. As supply fell, prices rose. America became vulnerable to future shortages.

OPEC didn't really begin flex its pricing muscle until President Richard Nixon effectively took the U.S. dollar off of the gold standard in 1971. The value of the dollar plummeted, taking oil revenues down with it.

OPEC halted oil exports to the United States in 1973. Its primary goal was to boost oil prices. It also wanted to punish America for its support of Israel in the Yom Kippur War. Congress created the Strategic Petroleum Reserve to provide a 90-day supply and prevent future shortages.

Since the 1970s, oil prices have become more volatile. They're affected by more than the laws of supply and demand. Oil prices are determined by oil futures contracts on the commodities markets. This means that commodities traders control oil prices. They'll drive prices up even if they only think there will be a surge in demand, such as during the summer driving season. They'll lower prices if they think there will be a dropoff. That usually occurs as demand falls in the winter.

In 2015, new U.S. production of shale oil increased global oil supply. By Jan. 19, 2016, the addition to supply had driven global oil prices down to a 13-year low of $26.64 per barrel. By November, OPEC had had enough. It cut production to revive prices. By April 2019, prices had returned to a range above $65/b. They remained in that range until early 2020.

In January 2020, many governments began restricting travel and closing businesses to stem the coronavirus pandemic. Demand for oil began falling. In the first quarter of 2020, oil consumption averaged 94.4 million barrels per day, down 5.6 million b/d from the prior year. By April, 40% of the world's population had been told to stay at home, further weakening demand.

Through the first quarter, OPEC and its members were abiding by an agreement to limit production. That agreement expired March 31, 2020. At the March 6, 2020, meeting, Russia refused to lower production. OPEC responded by announcing it would increase production. As storage facilities filled, prices plummeted into negative territory. No one wanted delivery of oil, since there was hardly any place to store it. As of April 20, 2020, the prices for a barrel of oil had fallen to -$36.98. On April 12, 2020, OPEC and Russia agreed to lower output to support prices.

The following chart shows the nominal value for imported crude oil according to the U.S. Energy Information Administration. The first column shows the average annual price. It's followed by the monthly high and low oil prices for that year. The last column shows the reasons and accompanying events for the price variations.