What causes fluctuations in oil price

What causes fluctuations in oil price?

Events on the international stage can create a climate of uncertainty which can lead to rises in oil prices. More important - like any market - is the equation between how much oil is pumped by the producers and the demand for oil among consumers.

Politics have also played a part in the past, as in 1973 when Opec members - led by Saudi Arabia - cut oil supply to punish the West for supporting Israel in the Arab-Israeli war. The move caused oil to jump from $3 a barrel to $12, causing economic crises in the developed world which had come to rely on cheap energy.

Since then, Opec's share of the oil market has dropped because more oilfields outside the organisation have come on stream. For many years Opec was also unsuccessful in getting members to stick to their own quotas.

Higher prices since March 1999 came about as Opec members agreed to cut their output - and stuck to quotas - to address an oil glut caused by a drop in demand after the Asian financial crisis.

The oil cartel was joined by a number of other exporters, notably Mexico, Norway and Oman, increasing the Opec-plus group's share of world output to 56%.