Oil. The price of oil (simple average of Brent,
Dubai, and West Texas Intermediate) dropped below $40 per barrel towards the end
of 2015. Prices have been driven lower by
high stocks in OECD economies, ample
global supplies, and expectations of slower
global demand (particularly from large
emerging markets). U.S. crude oil production
has begun to decline due to lower investment
and drilling but was resilient for most of
2015. OPEC production increased further,
reaching a three year high, with much of the
increase coming from Saudi Arabia and Iraq.
A removal of sanctions following the
implementation of the Iran nuclear agreement
could increase Iranian oil exports by 0.5-0.7
million barrels per day by 2016, nearing the
pre-sanctions level of 4 percent of global
consumption. Since other energy prices are at
least partially linked to oil prices, prices for
other energy products, including natural gas,
have also fallen.