This hard commodity is a major source of energy for the world.
Have you ever wondered why newspapers and news channels report so actively on crude oil
prices? This is because this commodity has an impact on virtually all sectors of a
country’s economy and all regions of the global economy.
Crude oil is used in the production of diesel and
gasoline, making it indispensable for the travel and tourism sector along with the
automobile industry. It is used for manufacturing different petrochemicals. It is also
used for producing fertilisers, cosmetics, textiles, steel, and more.
What are the main reasons for price fluctuations
in crude oil?
As with any other asset or financial instrument,
crude oil prices fluctuate based on the demand and supply of this commodity. Signs of
economic growth or thriving business activity support crude prices. Any disruption in
the supply or a decline in stockpiles can exert pressure on crude prices. Also,
geopolitical tension that impacts oil producing regions can cause crude prices to
The supply of crude is carefully planned by the
Organization of the Petroleum Exporting Countries (OPEC) and their allies. The group,
along with allies, is known as OPEC+ and comprises of the major oil producers of the
OPEC members: Saudi Arabia (the de facto leader),
UAE, Iran, Iraq, Kuwait, Libya, Nigeria, the Republic of the Congo, Venezuela, Algeria,
Angola, Equatorial Guinea, and Gabon.
OPEC+ members: Apart from the above OPEC members,
OPEC+ countries include Russia, Mexico, Oman, Sudan, Azerbaijan, Bahrain, Brunei,
Kazakhstan, and Malaysia.