International oil prices firmed significantly in 2005, in response to high global demand. Crude oil prices rose from US$44/barrel in January and broke through the US$70 per barrel mark in August 2005.
This was largely in response to excess demand created by floods and storms experienced by some of the world's major oil consumers. Crude oil prices had, however, retreated to the pre-storm levels of around US$58 per barrel by the end of the year.
The fall in crude oil prices is attributed to the anticipated decline in fuel demand and the expansion projects being undertaken by some of the major oil producing countries to increase supply.
Any further decline in oil prices will be a welcome development to non-oil producing countries as this translates into lower costs of production and reduced pressure on balance of payments positions.
The rise in the international price of crude oil has, however, presented non-oil producing countries like Zimbabwe with opportunities to explore alternative sources of fuel. These include the extraction of oil and methane gas from coal, bio-diesel from plant seeds, ethanol from sugar cane as well as solar power generation.
Source: The Business Herald 25 January 2006. Monetary Policy Statement.