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Fluctuation in Crude Oil Price, 2021 By: Anyatama Basak (Xavier Business School, St. Xavier’s University Kolkata) Crude oil prices all over the world are influenced by a number of factors, such as
Decisions of the oil-producer like Organization of Petroleum Exporting Countries (OPEC – a consortium of 13 countries namely Algeria, Angola, Congo, Nigeria, Equatorial Guinea, Gabon, Iran, Iraq, Libya, Kuwait, Saudi Arabia, the United Arab Emirates and Venezuela). Independent producer countries like Russia, private oil-producing firms like ExxonMobil and others. Political instability in the Middle East as the region accounts for the lion’s share of the worldwide oil supply. Cost of production and difference in oil storage across regions. Increase in interest rate followed by raise in manufacturing cost and resulting in less money in hand and less time spent for driving. Demand and supply of oil from non-OPEC countries, balance between OECD inventories and future spread, spot prices, operations in financial markets.
Surprisingly, unlike other natural disasters which increase the price of oil by generating a supply shock, COVID-19 pandemic has created a demand shock by several lockdown and cancellation of both domestic and international flights in different nations throughout the world during different phases of lockdown.
Pre-pandemic era:
