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  • For most Americans, that means what the U.

  • S.

  • Says and does will impact what they pay at the pump.

  • Here's what drives oil prices World affairs are just one of many factors that dictate oil prices.

  • If you're in the world of oil monitoring the ebbs and flows of crude prices a second nature most investors either followed W.

  • T I or Brent crude.

  • Brent crude refers to oil from certain oil fields in the North Sea, and it's used as an international benchmark for oil prices in West Texas.

  • Intermediate is one type of light crude that's drilled in the U.

  • S.

  • And surface of benchmark for US oil prices.

  • If you're not an oil analyst, it may seem like a lot to keep up with.

  • But regardless of which of those contracts, you follow the justice is the same for both.

  • Oil prices are influenced by three major factors. 00:00:59.680 --> 00:01:2.230 Supply, demand and geopolitics. 00:01:2.960 --> 00:01:7.250 Supply and demand just has to do with how much oil is available and how badly people want it. 00:01:7.560 --> 00:01:15.500 Supply has historically been determined by countries that are part of the Organization of the Petroleum Exporting Countries, also known as OPEC.

  • But now the United States is playing a bigger role in supply thanks to the booming production from American shale fields.

  • So if major oil producing countries are pumping out a lot of oil, the supply will be high.

  • Just look at what happened in 2014.

  • At the OPEC meeting in November, Saudi Arabia made the decision that they were not going to cut back production.

  • They were gonna continue to produce at record high level at the same time you had very robust out.

  • But from the United States from other producers around the world, it was more oil than the market needed.

  • Oil prices crashed as producers pumped more than the world could consume. 00:01:56.860 --> 00:02:1.750 OPEC was largely blamed for the free falling oil prices because it refused to cut down its production. 00:02:2.190 --> 00:02:3.390 But OPEC said that U. 00:02:3.390 --> 00:02:7.850 S shale drillers were to blame for pumping too much and that they should cut their production first. 00:02:8.290 --> 00:02:17.250 In 1973 Arab members of OPEC put an embargo against the United States as a retaliatory measure after the embargo, the oil supply in the U.

  • S.

  • Was so scarce in the demand was so high it drove the price of oil to the point that gas stations begin rationing.

  • Gasoline demand, on the other hand, is determined by how much need there is for oil at a given time.

  • Think of the need for things like heat, electricity and transportation.

  • The more economic growth a regency's, the more demand there will be for oil.

  • And then there's the question of how the market will react to renewable energy.

  • A lot of this will be impacted by public policy, but at the end of the day, renewable and on Lee displaced hydrocarbon, it's economically feasible.

  • Right now, renewables are still more excessive than I do. 00:02:57.340 --> 00:03:2.640 Urban consumers bar going geopolitics. 00:03:2.950 --> 00:03:6.670 Remember how supply is determined by the big oil producing countries? 00:03:7.140 --> 00:03:15.640 Well, if there's tension with one of those countries, like a major war or conflict, it could throw off the supply of oil, which would then alter the price of it.

  • Only one situation in the Middle East are other oil rich region in the world would flare up and there was a conflict was generally speaking, maybe a little bit of an uptick in the price of oil.

  • I want you have applied these destructed or a means of transportation pipeline worker going on things like that.

  • Just think back to 2003.

  • After the US invaded Iraq, oil prices went up, and with instability in the region, people weren't immediately sure what would happen to the supply.

  • More recently, President Trump pulled out of the Iran nuclear deal and restored sanctions on Iranian oil exports. 00:03:59.840 --> 00:04:5.750 Oil prices hit three and 1/2 year highs as traders tried to figure out how the sanctions will impact global oil supply. 00:04:6.090 --> 00:04:18.970 That's what makes the oil market so fascinating is that it's really a very interesting interplay of financial markets, the economy and the new very everything.

  • In the current market, Theo energy industry is sure to evolve, and it remains to be seen what role oil will play in the future.

  • But for now, the oil markets remain a powerful force in the world of economics, geopolitics, and you're commuting budget.

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For most Americans, that means what the U.

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