Oil Price History—Highs and Lows Since 1970

Oil prices in the 20th century remained stable, in real terms, until the 1970s. Since then, political, economic, and other changes have rocked the oil landscape. In 2020, the coronavirus pandemic sent prices plummeting. In 2022, the Russia-Ukraine conflict caused prices to skyrocket.

Oil Prices in the 1960s and 1970s

Global oil prices in the 20th century generally ranged between $1.00 and $2.00 per barrel (/b) until 1970. That's about $10/b to $30/b when adjusted for inflation. The United States was the world's dominant oil producer at that time, and it regulated prices. Domestic oil was plentiful. Cheap oil and gas expanded interstate highways, interstate trucking, and auto ownership became part of the American Dream. But multiple changes have occurred since then.

In 1960, Saudi Arabia and other foreign oil-exporting nations formed the Organization of Petroleum Exporting Countries (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 begin to flex its pricing muscle until President Richard Nixon effectively took the U.S. dollar off 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 ensure an adequate supply of petroleum products and prevent future shortages.

Why Oil Prices Are Volatile

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 in the short run by oil futures contracts on the commodities markets. This means that in the short run, commodities traders can also affect oil prices. They can drive prices up even if they only think there will be a surge in demand, such as during the summer driving season. They can lower prices if they think there will be a dropoff in demand. That usually occurs as demand falls in the winter.

U.S. Shale Oil Production

In 2015, new U.S. production of shale oil increased the global oil supply. By Jan. 20, 2016, the addition to supply had driven global oil prices down to a 13-year low of around $26/b. By November, OPEC had had enough. It cut production to revive prices. By April 2019, global prices topped $71/b. They remained above $55/b until February 2020; by March 2020, when Covid-19 affected the entire global economy, oil prices began falling more rapidly, soon reaching record lows. 

Coronavirus Pandemic

In January 2020, many governments began restricting travel and closing businesses to stem the coronavirus pandemic. As a result, oil demand began falling. In the first quarter of 2020, oil consumption averaged 94.4 million barrels per day (b/d), down 5.6 million b/d from the prior year.

Through the first quarter, OPEC and its members were abiding by an agreement to limit production. That agreement expired on 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.

In April 2020, prices for a barrel of oil fell to an unprecedented negative oil price: around -$37/b in the United States for West Texas Intermediate (WTI) at Cushing and $9/b internationally for Brent oil. On April 12, 2020, OPEC and Russia agreed to lower output to support prices.

At its April 1, 2021, meeting, OPEC decided to begin increasing production. At its June 1, 2021 meeting, OPEC confirmed it would gradually return 2 million b/d of the adjustments it made to the market.

In July 2021, OPEC announced that it would increase oil production by .4 mb/d monthly until it phased out the lower output it created in 2020.

Oil Prices by Year: Average, High, Low, and Events

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 responsible for the price variations.

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