What Makes Oil Price Rise?
Oil factor has big impact to the world economic growth. Since oil is one of the main energy resources, it becomes one of the most valuable commodities. The deviation of oil prices, mostly by reflect in crude oil price, significantly affects the major economic growth. The increasing of oil price will affects many aspects of the economic. Since the oil matter is significant to the world, there is a question what make the oil price rise or fall? What factors could affect oil price?
Just like the most basic economic principle, oil prices also the result of balance of crude oil supply and demand. Crude oil is traded is commodity market such as New York Mercantile Exchange (NYMEX). On this market, the price depends on the investment rate in the long term. Crude Oil market just like other commodities is significantly affected by sentiment. Trader could raise the price if they believe that there would be a shortened oil supply in the future days.
Outside the market, crude oil price is also affected by many natural and political conditions. Natural disaster and bad weather could affect crude oil production and transportation leads to the shortening of oil supply. Political and military conflicts in the rich oil region also affect the oil supply. Other policies could be made by OPEC, oil exporter countries that lowered their production quota to guarantee profitable price for them.
