Energy
May 11, 2026
Why is oil so cheap? Prices might seem high to consumers – they have nearly doubled since December. But with 10 per cent of the world’s oil exports still cut off and no obvious progress in peace talks, Friday’s close of $101 for Brent crude looks amazingly calm, or complacent.
Oil prices have exceeded $100 per barrel, accounting for inflation, on five occasions: during the 1978-81 period of the Iranian revolution and the outbreak of the Iran-Iraq war; at the end of the Chinese-driven commodities boom in 2008; during the Libyan revolution and sanctions on Iran in 2011-14; in 2022, after the Russia's full invasion of Ukraine; and now in the current war.
The late 1970s is the closest comparison to the current situation. There was real physical damage to facilities. The other Opec countries, rather than offsetting the crisis, cut back from 1980 onwards to preserve high prices. World production fell by about 10 per cent between 1979 and 1981, a magnitude similar to today’s cut-off, though unfolding more slowly.
