Name: Here’s What Drives The Price Of Oil | CNBC
Uploaded: 2020-03-10T23:51:25.000Z
Duration: 4 min 52 s
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For most Americans, that means what the U.

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.

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.

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.

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.

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.

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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