By the end of September oil prices were approaching $100 dollar per barrel. But after three consecutive weeks in October, crude prices have fallen more than 20 percent, as of this week, to $78 per barrel. In the United States the average price of regular unleaded gasoline, according to the American Automobile Association, is down to $3.35 per gallon, from $3.60 a month ago.
However, this downward trend may be brief. As warned by the World Bank’s last Commodity Markets Outlook, released on October 30, “an escalation of the latest conflict in the Middle East could push commodity markets into uncharted waters.”
Meanwhile, the favorable factors pushing down oil prices persist. Among them, at a monthly production record of over 13 million barrels a day, the United States still is the world’s largest producer. Also, Brazil has registered record crude output and newcomer Guyana has the potential to become a major producer. Additionally, oil from sanctioned producers, such as Iran and Russia, keeps flowing into the world market, while the Chinese economy, the world’s major oil importer, slows down. Finally, after sanctions were lifted following an agreement, Venezuela with the world’s highest proven reserves, can again supply heavy crude oil to specialized refineries in the West Coast of the United States.