ESSAY

 The economic concepts can be seen in this video is supply, demand

and geopolitics.
 Oil prices are influenced by supply, demand and geopolitics. But the
concepts have the most important role to affect the oil’s price are
supply and demand.
Crude oil, or “black gold,” is one of the world's most precious commodities.
Price changes in the commodity can affect the economic ecosystem at every
level, from family budgets to corporate earnings to the nation's GDP. Indeed,
sudden price drops or unexpected spikes can send global financial markets into
a tizzy.

Crude oil prices change quickly in response to news cycles, policy changes, and
fluctuations in the world's markets. Since 2014, oil prices have experienced a
downward journey, falling from highs of around $115 per barrel. In February and
March of 2020, crude prices accelerated their decline in reaction to the
coronavirus pandemic and an expected sharp drop in demand for oil. In addition,
major oil producers failed to come to an agreement on production cuts,
exacerbating the problem. By mid-March 2020, the price of U.S. crude oil was
fluctuating just around $19 per barrel.

The Determinants of Oil Prices

With oil's stature as a high-demand global commodity comes the possibility that
major fluctuations in price can have a significant economic impact. The two
primary factors that impact the price of oil are:

 Supply
 Demand

Supply

For several decades, the Organization of Petroleum Exporting Countries (OPEC)

has been the elephant on the world's trading floors, with its oil-producing member
nations working together to determine prices by boosting or reducing crude oil
production. While OPEC's grip on the market has loosened some in past years,
its decisions continue to play a dominant role. OPEC's every move is watched
closely by governments, oil companies, speculators, hedgers, investors, traders,
policymakers, and consumers.
OPEC's policies are affected, in turn, by geopolitical developments. Some of the
world's top oil producers are politically unstable or at odds with the West (issues
pertaining to terrorism or compliance with international laws, in particular, have
been problematic). Some have faced sanctions by the U.S. and the United
Nations.

In the past, supply disruptions triggered by political events have caused oil prices
to shift drastically; the Iranian revolution, Iran-Iraq war, Arab oil embargo, and
Persian Gulf wars have been especially notable. The Asian financial crisis and
the global economic crisis of 2007-2008 also caused fluctuations.

The supply crude oil is also determined by external factors, which might include
weather patterns, exploration and production (E&P) costs, investments, and
innovations. For example, thanks to advances in technology that allow
companies to extract oil from rock—so-called shale oil—the United States
became the world's largest producer of oil in 2018 and a major source of global
oil supplies.

Demand

Strong economic growth and industrial production tend to boost the demand for
oil—as reflected in changing demand patterns by non-OECD nations, which have
grown rapidly in recent years. According to the U.S. Energy Information
Administration,

“Oil consumption in the Organization for Economic Cooperation and

Development (OECD) countries declined between 2000 and 2010, [while]
non-OECD oil consumption increased more than 40%. China, India, and
Saudi Arabia had the largest growth in oil consumption among the
countries in the non-OECD during this period.” 

Other important factors that affect demand for oil include transportation (both
commercial and personal), population growth, and seasonal changes. For
instance, oil use increases during busy summer travel seasons and in the
winters, when more heating fuel is consumed.