factors that affect the price of oil

 

 

There are a number of factors that affect the price of oil Simple Economics of demand and supply exogenous or unexpected shocks, alternative energy sources, the movement of the dollar and market speculations.

when economic activity increases in an economy demand for oil rises. without a similar rise in supply the price of oil will rise. in 2008 recession hit and economic activity dropped in many of the world's leading economies, the price of Brent plummeted from $145 a barrel in july that year to below $40within a  5 month period.

thereafter China's demand Rose and prices higher over the following five years. to control this rise in prices and efficient marketing bring on extra supply, the supply of oil comes from to Broad areas

1.OPEC nations

2.Non OPEC nations

OPEC supplies around 30 million barrels of the 150 million barrels at the world uses everyday supply. Oversupply by OPEC  Nations has been cited as one of the main reasons behind a 60% drop in brent from June 2014 to January 2015.

What are the substitutes ? 

Good value alternatives will see the price of oil drop. nuclear, wind , and crop basesd oil are all good examples where consumers could switch from one source to another However this depends on a constant supply and competitive pricing.

is an event at the movies market prices and cannot be explained by economics the event that a sudden and under.

Natural events like hurricane Katrina in August 2005 provided a substantial exhaustion shocked at the oil markets immediately taken out of supplyline terrorist activity is another example with oil being priced in US dollars and move in the foreign exchange market effect on the Monastery price action stronger US dollar against sterling pushes down the cost of all for us here in the UK this assuming all other.

Futures market and there is much speculation as to where demand and supply will be in the future for China announced more nuclear plants for the growing global population cars or air-conditioning units we're continuing to see an energy.

The growing global population demand more cars or air conditioning units government legislation to control the use of oil fuels this all have an effect on demand while new technologies like fracking could bring on more new supply for the moment. There is still plenty of easily accessible oil, how ever unless oil companies have the incentive to invest in new exploration or build new technologies to otherwise inaccessible oil my time will see the price of all rise through the limited supply in an environment of increasing demand.