Oil’s Long-Term Price Stability
The Brent crude oil chart (see the image below) reveals a notable trend. Over the past two decades, prices have consistently returned to a mean of around $67–$68 per barrel.
Despite spikes above $100 in 2008 and drops as low as $15 during crises like COVID-19, the price regularly reverts to this level—an intriguing phenomenon for such a crucial global commodity.
Rising Demand from Emerging Economies
While discussions about electric vehicles and alternative energy dominate the headlines, long-term projections for oil demand—especially from India and China—show no signs of slowing. This increasing consumption from emerging markets contradicts the common narrative that oil demand is peaking.
Monetary Expansion vs. Real Oil Value
A key point often overlooked is the role of monetary expansion. Over the last 20 years, the global monetary base has increased significantly. A dollar in 2005 does not hold the same purchasing power as it does in 2025. Yet, in nominal terms, crude oil prices have barely budged. In real terms, oil is actually cheaper today than it was two decades ago.
Controlled Supply and the Risk of Repricing
Oil remains one of the few commodities controlled by a limited number of producers and industry groups. If this control shifts or if demand dynamics force a reassessment, a repricing of oil could occur, potentially pushing it into a new, higher price range. Historically, oil prices have stagnated for decades but then experienced sudden ‘step-ups’, entering a new long-term range.
Flawed Assumptions of the Global Economy
Much of the global economy operates under the assumption that oil will remain within its current price range. However, if and when oil is repriced to reflect real economic variables, it could create significant challenges for economies worldwide—challenges they may not be prepared for.
What are your thoughts on long-term oil pricing? Could we be underestimating this potential risk? Share your views in the comments, and if you found this blog useful, don’t forget to SHARE it with your friends!
