Oil prices are a barometer of the world economy. Rising prices between 2003 and 2007 reflected the best global economic growth in a generation. This high economic growth was brought to an end not only by underpricing of risk, excess liquidity and over-confidence but also by an increasingly unsustainable commodity boom – of which oil was a crucial part. Now, as the world has dropped into recession, oil prices have fallen by more than half.

This fall also reflects the power of price itself. For rising prices set in motion decisions by consumers, governments and businesses that have changed the course of demand. Now the recession is also weighing increasingly heavily on demand.