Title: Top Factors That Affect the Price of Oil
Headings: Top Factors That Affect the Price of Oil
Top Factors That Affect the Price of Oil
Supply
Key Takeaways
Demand
Derivatives and Reports
The Bottom Line

Content: OPEC's policies are affected, in turn, by geopolitical developments. Some of the world's top oil producers are politically unstable or at odds with the West (issues pertaining to terrorism or compliance with international laws, in particular, have been problematic). Some have faced sanctions by the U.S. and the United Nations.﻿﻿ ﻿﻿
In the past, supply disruptions triggered by political events have caused oil prices to shift drastically; the Iranian revolution, Iran-Iraq war, Arab oil embargo, and Persian Gulf wars have been especially notable.﻿ The Asian financial crisis and the global economic crisis of 2007-2008 also caused fluctuations. 3 ﻿﻿﻿
The supply crude oil is also determined by external factors, which might include weather patterns, exploration and production (E&P) costs, investments, and innovations.﻿﻿﻿ For example, thanks to advances in technology that allow companies to extract oil from rock—so-called shale oil —the United States became the world's largest producer of oil in 2018 and a major source of global oil supplies. 4 ﻿﻿﻿﻿
Demand
Strong economic growth and industrial production tend to boost the demand for oil—as reflected in changing demand patterns by non-OECD nations, which have grown rapidly in recent years. According to the U.S. Energy Information Administration ,
“Oil consumption in the Organization for Economic Cooperation and Development ( OECD) countries declined between 2000 and 2010, [while] non-OECD oil consumption increased more than 40%. China, India, and Saudi Arabia had the largest growth in oil consumption among the countries in the non-OECD during this period.” 5 ﻿
Other important factors that affect demand for oil include transportation (both commercial and personal), population growth, and seasonal changes. For instance, oil use increases during busy summer travel seasons and in the winters, when more heating fuel is consumed.