Title: Factors Affecting Demand & Supply of Oil Prices | Bizfluent
Headings: Factors Affecting Demand & Supply of Oil Prices
Factors Affecting Demand & Supply of Oil Prices
Increased Oil Consumption
Oil Reserves
Exchange Rates
Environmental Factors
Political Factors
Speculation

Content: In cases of appreciation, such as when the euro strengthened in value, increased oil prices can be canceled out by a more valuable form of money. Environmental Factors
The environment can have a strong effect on the global price of oil, in terms of drastically changing the ability to produce oil supplies. For example, in 2004, a number of devastating hurricanes hit off the southeast coast of the U.S. These hurricanes damaged oil supply facilities and reduced the flow of crude oil supplies to the U.S. Applying the economic principle of supply and demand, the decrease in oil production could not meet with consumer needs and caused an increase in oil prices. Political Factors
Whenever a major oil producing country is affected by political conflict, that nation's ability to continue production will be affected. For example, the 2002 political strikes in Venezuela had a detrimental effect on the major oil producer's supplies, causing worldwide shortages and ultimately increasing prices due to disparities with demand. The Iraq war provided another incident of oil price increases, as the nation's production capability was affected due to military conflicts and terrorist attacks. Speculation
Outside of physical supply of oil reserves, the financial market has the ability to change oil prices through speculation. Essentially, this means financial traders speculate on oil supplies through contracts that are for future shipments, rather than those currently being distributed. This speculation can lead to traders working to raise or lower the price of oil to receive desired profits on purchased contracts. References
Federal Reserve Bank of St. Louis: