Prior to the economic crisis, the world was experiencing a boom characteristic of the business cycle. Oil prices were on a gradual rise with oil exporters relishing in the increased demand of oil. As indicated in the following diagram, the price oil per barrels rose from US$24 in 2000 to over US $145 in 2008.
Once the crisis hit, the price f oil crashed to close to US$40, representing a drop of over US$100 within one year. This kind of drop is bound to destabilize the economy of the oil producing economy, especially at the backdrop of reduced demand for the product. Over the period between 2000 and 2008, the rise in oil prices is directly attributable to the prevailing political and social stability in the region, represented by the liberalization ofIraq. The global economies, both oil importing and exporting experience growth in their economies, which is represented by an increase in the oil prices over the price.
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