Why Do Oil Prices Go Up And Down

11th October 2024

Oil prices change due to a number of factors, including supply and demand, geopolitical risks, and the global green energy transition.

Supply and demand: Oil prices are driven by the laws of supply and demand, just like other commodities. When supply is high and demand is low, prices fall. When demand is high and supply is low, prices rise.

Economic growth: Economic growth increases demand for energy, which includes petroleum products like gasoline and diesel.
Geopolitical risks: Wars, airstrikes, and other geopolitical events can impact oil prices.

OPEC: The Organization of the Petroleum Exporting Countries (OPEC) is a cartel of oil-producing nations that can control oil supply to some degree.

Green energy transition: The global transition to green energy can impact oil prices.

Financial crises: Financial crises, like the Great Recession of 2008, can cause oil prices to fall.

Oil prices are also set by oil futures, which are binding agreements that give the buyer the right to buy a barrel of oil at a set price in the future.

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