The passing of peak oil?

Back in July, a barrel of crude cost $147. Fast forward three months and it is back under $70, amid fears of a global recession coupled with a significant slump in demand. So what does the drop mean for Gulf producers?

When a Goldman Sachs analyst predicted that oil prices could reach $200 a barrel over the next six to 24 months in May, it sent shockwaves around the world.

Newsweek ran a cover that conceptualized what a future $200-a-barrel-world would look like, while the Los Angeles Times envisaged a breakthrough in telecommuting. All the while, Western governments railed against OPEC for refusing to increase output.


By September, the same analyst cut his 2009 oil price target from $140 to $110. Last week, Goldman Sachs slashed its 2009 oil price target by another $35 to $75.

“We clearly underestimated the depth and duration of the global financial crisis,” a team of commodity analysts wrote in a research note. And yet $200 oil didn’t seem like such a strange idea this summer, when a barrel of crude was nearing $147.

Three months later and it looks like most people are going to have to keep coming in to the office for work, at least for the next two years or so. This month, oil traded below $70 for the first time in 15 months, less than half its peak value.

Arabian Business