Economic Implications of the Drop in Oil Prices

World oil prices have fallen dramatically in the past six months, from US$ 115 for a barrel of Brent crude in June to under US$ 60 in late December. The European and Japanese economies are stagnant, while growth in many emerging markets has slowed. U.S. production of unconventional oil has risen rapidly over the past four years, and production by OPEC has remained high. The price decline has major implications both for countries that depend on exports of oil and for those that depend on imports. A major shift in the pattern of world payments has resulted. It will also influence private investment in exploration and development of new oil resources and in some renewable sources of energy, particularly biofuels.