One year ago this month, one of the biggest stories of 2014 began to unfold, largely unwittingly to many of us. From June to December 2014, the drastic slide (40%) occurred in the price of Brent crude oil, plummeting even further by January 2015 to $47 per barrel.
Late April saw the price of Brent crude settle back around $60-65 per barrel, its highest level since early December (2014). In fact, oil prices rose 20% in April for the strongest recovery since the collapse began last summer. But it is all still a far cry from prices pre-crisis, at nearly half the $115 per barrel value of a year before.
The effects have been profound and a many splintered thing, impacting upon traditional and non-traditional producers alike, the energy sector as a whole, and the performance of various regional economies. Long-term projections still point to an upward trend in crude oil prices, but if the depressed dynamics continue then greater investment downstream is expected as countries and corporations drill down into the added value of each barrel.
This will see the term ‘scraping the bottom of the barrel’ take on a whole new significance, as will the increasing exploration of tight oil formations. According to the Energy Information Administration’s (EIA) recently released Annual Energy Outlook 2015 (AEO2015) report, there will be strong growth in domestic US crude oil production from tight formations through to 2020, for example, leading to a decline in net petroleum imports and a growth in product exports. Some sources suggest that up to $150bn will be spent on further developing North American tight oil fields in 2015 alone.
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