As these nations lifted hundreds of millions out of poverty, their energy appetites grew exponentially. In Nigeria, militant attacks on oil infrastructure frequently shut down export terminals, removing millions of barrels from the market.
Market Forces Behind the 2008 Oil Price Peak
This effectively increased global demand, as European, Asian, and other investors could purchase more oil with their stronger currencies. Financial Speculation and Market Psychology As physical demand tightened, the oil market became an increasingly attractive arena for financial speculation.
For decades, oil consumption was largely driven by the developed economies of North America and Europe. This persistent narrative of scarcity, combined with the lingering trauma of the 2005 Hurricane Katrina disruptions, created a market environment where any potential interruption was met with aggressive price spikes.
Market Forces Behind the 2008 Oil Price Peak
However, as prices approached $140, the market began to detach from fundamentals entirely. Throughout the mid-2000s, the value of the US dollar had been declining relative to other major currencies.
More About Why did oil spike in 2008
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