The following is a fairly well complete list of factors that influence oil prices.
Many things influence prices and many things are dependent on other things.
Let’s take a look.
Factors Affecting Oil Prices
- Global supply and demand for oil
- Political instability in oil-producing countries
- Geopolitical tensions and conflicts
- Production cuts or increases by OPEC and other major oil-producing countries
- Influence of major oil-consuming countries
- Changes in currency exchange rates
- Economic growth and recession
- Environmental regulations and trade policies and tariffs
- Technological advancements in the energy sector
- Natural disasters and extreme weather events
- Investment and speculation in the oil market
- Inventory levels of oil and petroleum products
- Production costs
- Refinery shutdowns or maintenance
- Transportation costs and infrastructure
- Government subsidies and taxes
- Environmental disasters such as oil spills
- Alternative energy sources and their costs
- Market speculation and manipulation
- Oil storage capacity utilization
- Global economic trends and changes
- Wars, sabotage (e.g., Abqaiq in 2019), and terrorist activities
- Oil reserves, discoveries, and exploration
- Use of oil derivatives and futures markets (affect hedging arrangements in the cash market, and therefore prices)
- The global political environment
- Changes in weather patterns
- Competition from other energy sources
- Access to and control over oil resources
- The role of international organizations such as the IMF and World Bank
- The role of global financial markets on oil prices
- The impact of sanctions and embargoes
- The influence of major oil market players such as national oil companies (i.e., the role of oil producing countries’ state oil companies in setting prices), and large oil firms
- The impact of public opinion and activism on oil consumption
- The influence of automation and digitalization on the oil industry
- The impact of public policy on oil consumption and production
- The effect of oil prices on consumer behavior and industries.
This is a list of factors that can influence oil prices.
However, it is worth noting that the oil market is complex and dynamic, with many factors influencing prices simultaneously and often in unexpected ways.
Also, the weight of each factor may vary depending on the historical and current context.