Crude oil prices have affected the international economy since the first oil shock in 1973. Oil-producing countries, including Saudi Arabia, which nurse ill feelings against the Western countries’ policies of the Middle East, raised the oil prices and reduced oil production to 5% every month. As a result, international markets faced a rise of oil prices. It means that oil is used as a political weapon, so the world was very affected by oil. In 1978, when the second oil shock happened, oil prices rose to 31 dollars, so the international economy was unstable. Fortunately, oil prices became stable in 1980.
  In the past, international oil prices have repeatedly risen and fallen, and in November and December, 2014, they plunged. The fall of international oil prices was caused by the highest oil-producing counties, Saudi Arabia. In October, Saudi Arabia reduced the settled price of the oil price for November. Consequently, oil prices fell, and they fell down more and more after the failure of a reduced production agreement at the general meeting of Organization of Petroleum Exporting Countries(OPEC). In reality, in November, Arabian light, which is the standard oil in Saudi Arabia, fell to $76.01. In the past, OPEC predicted that oil demands in 2015 would decrease less than those in 2014. However, Saudi Arabia stuck to the output without any reduced production policy. It was because of shale oil development in U.S.A.
  Saudi Arabia thought that the increased production of American shale oil brought down international oil prices. With positive development of American companies, oil and gas development businesses in shale succeeded in U.S.A. Shale oil and gas started to be substituted in U.S.A. International Energy Agency(IEA) assumed that shale gas occupied half of the non-traditional natural gas deposits from all over the world. Shale gas received attention as international oil prices rose and prices for developing technology decreased. U.S.A. mainly developed shale gas. Meanwhile, international oilfield development in 2014 was really affected by shale oil development in U.S.A. In this sense, Saudi Arabia was concerned that increased production of shale oil could cause confusion in oil markets, so it just watched without any action toward oil’s fall to maintain oil output and market share.
  This international oil fall is basically due to the opposition between U.S.A. and oil-producing countries in the Middle East over shale gas development. Also, this international oil fall holds other countries in check and blocks out the funds of the terrorist group, IS. Therefore, international oil prices have connections with not only the economy but also politics and diplomacy among countries.
  After oil prices plunged the last time, oil prices have continuously fallen. However, international oil prices started to show a rebound trend on February 24th, 2015. As international oil prices remained stable in February, a ‘new-normal’ period where about 60~80 dollars per barrel will come in a year. However, the situation can be changed in that international oil falls are influenced by the conflict between OPEC and shale gas producing countries or politics and diplomacy.

By Oh Ah-ra
ar34@cbnu.ac.kr