CFDs and Spread bets are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs and Spread bets with this provider. You should consider whether you understand how CFDs and Spread bets work and whether you can afford to take the high risk of losing your money.

What are the Underlying Factors Affecting Oil to be at a 14 Year High?

Oil – US Crude and Brent Crude

Apr 12, 2022

Edit Page

A lot of factors come into play when talking about the price of oil and these factors have played a huge role in both Brent oil and US crude. Oil prices have always been influenced by traders and their bidding activities based on perceptions of demand and supply.

Amidst these elements, we will be looking at the main underlying factors that affect oil, causing it to be at a 14-year high.

More than 30% of the supply of crude oil in the world is produced by the organization of the petroleum exporting countries and this has heavily affected oil prices over the years. The production of U.S shale oil increased exponentially within a three-year gap and this affected the balance between demand and supply for a few years. The spike in production of these oils has affected West Texas Intermediate, causing a spike in the prices of oil, especially in the United States of America.

Vladimir Putin’s decision to invade Russia in February 2022 played a major role in affecting the price of oil, contributing to its already-counting 14-year high, and for the first time in more than seven years, oil prices surpassed the threshold of $100 per barrel.

The United States of America decided to place a restriction on the importation of oil in March 2022, knowing fully well that Russia is the largest exporter of oil. To deal with these supply problems, the United States in partnership with other countries has decided to tap into the oil reserves, gathering sixty million barrels. Despite this decision, there are a lot of uncertainties as to when the conflict would end and the price of oil still remains above $100 per barrel.

The price of oil is currently on the rise because of three main factors that include future supply, current supply, and worldwide demand. A lot of factors, especially world conflicts like the invasion of Ukraine, have contributed greatly to the 14-year high in oil. 

All the content is provided for general information only and trade signals should not be construed as any form of regulated advice. It does not take into consideration your personal circumstances, including your investment objectives, risk profile, tax status, knowledge and understanding or financial situation. Past performance is no guarantee of future results.