Which decade marked the end of the twenty-year surplus of oil?

• A. 1970s
• B. 1960s
• C. 1980s
• D. 1950s

Answer: (A)

Oil markets stay in surplus when production exceeds consumption, keeping inventories high and prices low. A twenty-year stretch of excess supply means that, for two decades, the world pumped more oil than was used, so the surplus persisted until demand began to outpace or supply became constrained. In the 1970s, demand started rising more quickly and supply faced new pressures from geopolitical events and OPEC’s increasing influence. The 1973 oil embargo and related disruptions tightened available supply and drove prices up, ending the long period of cheap, abundant oil. After that, markets moved toward tighter balance and higher prices, whereas the 1960s still reflected ample supply, and the 1980s often saw oversupply again as production surged and prices fell. The 1950s were earlier and did not mark the end of the long surplus.