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Abby Yuan

Why does international oil price fluctuate?

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1. Supply-demand relationship

Global Economic Development

Generally, when the global economy recovers or prospers, the demand for crude oil will rise, leading to higher oil prices. When the global economy recedes or develops slowly, the demand for crude oil will drop, leading to a drop in oil prices.

Crude oil inventory

Petroleum as a non-renewable resource uses a little less. Therefore, the adequacy of crude oil supply is also an important factor affecting oil prices. With sufficient crude oil stocks, the pressure of oil supply is relatively small, which will restrain the rise of oil prices.

Political and Economic Situation of Oil-producing Countries

Geopolitical relations, economic development speed, changes in petroleum refining technology and environmental climate change in Saudi Arabia, Iran and other oil-producing countries will have an impact on the exploitation and refining of crude oil, thus affecting the supply of crude oil.

2. US Dollar Exchange Rate

At present, most international crude oil transactions are dominated by US dollar, and the change of US dollar exchange rate also has some influence on crude oil prices.

If the dollar depreciates, non-dollar-denominated oil will be relatively cheaper for oil-importing countries other than the United States, which will increase oil imports and thus push up oil prices. For oil-exporting countries, because of the depreciation of the dollar, their incomes will decrease, so they need to push up oil prices (such as reducing oil production) to ensure their incomes.

3 speculative capital

Oil is also a kind of futures. The frequent operation of speculative funds in the futures market will also have an impact on the fluctuation of international oil prices.

For example, the adjustment of oil prices on January 14, 2019 is due to the reduction of production in major oil-producing countries, such as OPEC and Russia, the slowdown in the trend of increasing U.S. crude oil production, and the rebound in the U.S. stock market also led to the rise in oil prices. In this case, domestic No. 92 gasoline rose 0.08 yuan, 95 gasoline, 0 diesel oil rose 0.09 yuan.

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