Produced by Vanessa Kortekaas. Written by Anjli Raval. Graphics by Russell Birkett.
In October, oil prices rallied to four-year highs, and traders were even asking if we could see a return to a $100 barrel oil. But prices have since tumbled, raising fears of a new downturn, like the big crash in 2014. So what explains the volatility? Well, investors and traders quickly realised there would be far more oil on the market than expected. US production has been swelling rapidly, and more Iranian oil could become available despite sanctions. There are also mounting concerns about weaker global economic growth.
This mobilised Opec and Russia to agree on a new round of oil supply curbs in December. Unlike in 2014, oil producers are actively cutting production to prevent another big drop in prices to protect their economies. This came even as US President Donald Trump called on Saudi Arabia to keep production high and prices low.
As major producers, how Saudi Arabia, Russia, and the US battle for influence is being watched closely. Even as Saudi Arabia and Russia say they will rein in supply and bolster prices, this will only benefit US shale oil companies. One question is how long Opec and Russia will be willing to indirectly help rivals, such as the US, which is now the world's biggest crude oil producer, and is becoming a more competitive exporter.