Chapter II. The World Economy

The outstanding development in the world economy in the early months of this year was the fall in oil prices. But while the broad scale of that fall is clear, it is by no means easy to see in detail what has been happening, as ‘netback’ prices are not generally known and yields of various barter deals are similarly undisclosed. By the middle of April spot prices of Brent and Dubai crude, which can probably be taken as representative for non-OPEC and Persian Gulf oils respectively, were down to around $10-11, rather more than 60 per cent below the level at which they had stood in December before OPEC effectively abandoned its restrictions on prices and production in order to increase its market share. But the fall in the average price at which oil is traded has probably lagged behind the fall in the spot price. There were reports of a substantial volume of business at an effective price of $15-16 per barrel at a time when spot prices were already much lower, and Brent was up again to about $12.50 by the end of the month.