Factors Controlling Crude Oil Prices (Part 3/3)

The pricing of crude oils has become increasingly transparent from the 1990s onwards through the use of marker crudes such as: West Texas Intermediate (WTI – USA) Brent (Europe and Africa) Dubai and Oman (Middle East) Tapis and Dubai (in Asia). Prices of crude oil markers and petroleum product markers are affected by a myriad of factors including: overall supply/demand for crude supply/demand for petroleum products freight rates competition in the crude markets competition in the regional and domestic markets for petroleum products.   After taking a look at the influence of OPEC decisions(Part 1/3) ,  Impact of Supply and Demand...

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Factors Controlling Crude Oil Prices (Part 2/3)

After taking a look at the influence of OPEC decisions(Part 1/3) in the price of Crude. Here let's talk about two more factors - " Impact of Supply and Demand" and "Poor Data or Information"   2. Impact of Demand and Supply   The global oil market prices are primarily influenced by demand and supply forces. The level of supply is largely dependent on the availability of oil in the reserves. Supply shortage causes an upward movement in the price pressure.This may be due to factors such asunplanned refinery shortage unforeseen demand increases  pipeline problems Supply levels are established by OPEC to a large extent because...

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Factors Controlling Crude Oil Prices (Part 1/3)

Global Crude oil Prices  There are many factors contributing to the fluctuations in the global crude oil prices. These can be summed under these four headings: OPEC Decisions Impact of Demand and Supply Poor data Other Factors In the first part we would talk about the role of OPEC in influencing the prices of crude oil.  1. OPEC Decisions:    OPEC abandoned fixing the reference price in 1987, favoring a system in which OPEC sets production quotas based on its assessment of the market’s call on OPEC supply. Oil prices fluctuate depending in part on how well OPEC does this calculus. Through the process of adjusting...

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