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Oil Prices Fall, and the Global Economy Wins

The Saudis are cutting production to try to slow falling prices
The refinery at Shaybah Oil Field in Saudi Arabia
The refinery at Shaybah Oil Field in Saudi ArabiaPhotograph by George Steinmetz/Corbis

Oil is in the middle of one of its steepest selloffs since the financial crisis, with prices on the international market falling 18 percent since mid-June, to $94 a barrel on Sept. 30. There are two explanations—not enough demand or too much supply. Supporting the weak demand argument: a stagnant economy in Europe, slower growth in China, and flat gasoline consumption in the U.S. According to the International Energy Agency, in 2014 world demand for oil will grow only 1.5 percent.