Understanding the Plunge in Oil Prices: Sources and Implications

159 Oil prices fell sharply in the second half of 2014, bringing to an end a four-year period of stability around $105 per barrel.2 The decline, which is much larger than that of the non-oil commodity price indices compared to early-2011 peaks, may signal an end to a price “supercycle”.3 Oil prices are expected to remain low in 2015 and rise only marginally in 2016 (Chapter 1). The sources and implications of the sharp decline in oil prices have led to intensive debate.

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