Oil is like the oxygen of the world today.

In the present context where a lot of alternative

sources of energy is being seen as an alternative to oil, where various companies are
trying to commercialize various vehicles and machines through different energy sources
such as electricity, solar and so on, the results are still not very practical and promising.
The whole world’s stability and growth is greatly dependent on oil. One cannot imagine
the world running and processing without oil. There is a lot of demand for oil and
petroleum worldwide. To fulfill this overall demand there are a number of countries that
produce and export crude oil to other countries. The major crude oil producing countries
have formed an organisation called The Organisation of the Petroleum Exporting
Countries(OPEC).

Issue no. 1
It is necessary to understand the factors that affect the crude oil prices in order to study
their past history and predict the possible future outcomes. The following paragraph
deals with the first issue and identifies the determinant factors of price change in the
crude oil market.

The above graph clearly shows a lot of rise and fall in oil prices. There are various
factors that cause these fluctuations such as changes in production, changes in
demand, trade wars, substantial increase in a certain currency, recession, national
interest, advance and efficient technologies,etc. Demand and supply greatly affects and
determines the oil prices. The shifts in demand and/or supply results in the change in oil
prices and the size of the change in price depends on the size of the shift and price
elasticity of demand and supply (John Sloman,2017). The OPEC contributes almost
35% supply in the overall crude oil market (EIA,2019). In an oligopoly market few major
firms or producers contribute about 40% of the total market share and in a perfectly
competitive market there are a lot of firms or producers who compete with each other in
setting a price and getting market share. Researchers Aihajji & Huettner (2000) argue
that the oil market acts somewhere in between the oligopolistic and competitive market
because of the different members in the OPEC with different strategies. There are
various factors that can be accounted for the cause of the rise and fall in oil prices.

During the year 2001 the price fell to the lowest of about $18 and again started
increasing gradually from mid 2001 until 2006. Prices hit the lowest in 2001 because of
the terrorist attacks, reduction in crude oil demand and the fear of recession (EIA,2001)
https://www.forbes.com/sites/judeclemente/2019/11/10/3-things-to-know-about-opecs-
latest-oil-forecast/#64589d3a5481 website

https://www.forbes.com/sites/simonlack/2018/06/04/americas-path-to-energy-
independence-the-shale-revolution/#13c5a4ff7554 website

https://pearsonblog.campaignserver.co.uk/oil-prices-the-ups-and-the-downs/
website/personal blog

http://web.a.ebscohost.com.ezproxy.uwe.ac.uk/ehost/detail/detail?
vid=0&sid=b8b6c7a2-d514-41d5-8398-
98857e5c06b1%40sessionmgr4007&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d
%3d#AN=82315883&db=bth journal

https://www.eia.gov/finance/markets/crudeoil/supply-opec.php website

http://web.b.ebscohost.com.ezproxy.uwe.ac.uk/ehost/detail/detail?vid=0&sid=e4d8424f-
1508-4a08-a85b-
be7817d800d5%40sessionmgr102&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d
%3d#db=bth&AN=3404520 aihajji and huettner

https://www.cnbc.com/2018/05/15/what-drives-oil-prices.html cnbc ko 2014 ma

https://books.google.com.np/books?
id=90lEAtajtP8C&pg=PR15&lpg=PR15&dq=why+oil+prices+fellin+2001&source=bl&ots
=OnrU_Ma-
ts&sig=ACfU3U05wQ8veP5dYtSlHhjdBePjKNBZ_A&hl=en&sa=X&ved=2ahUKEwjtlL-
z2uLlAhUBIbcAHTRbBx4Q6AEwCnoECAkQAQ#v=onepage&q=why%20oil%20prices
%20fellin%202001&f=false EIA 2001 ebook
1. Clemente, J. (2019). 3 Things To Know About OPEC’s Latest Oil Forecast. [online]
Forbes.com. Available at: https://www.forbes.com/sites/judeclemente/2019/11/10/3-
things-to-know-about-opecs-latest-oil-forecast/#64589d3a5481 [Accessed 12 Nov.
2019]. (Clemente, 2019)
2. Lack, S. (2018). America's Path To Energy Independence: The Shale Revolution.
[online] Forbes.com. Available at:
https://www.forbes.com/sites/simonlack/2018/06/04/americas-path-to-energy-
independence-the-shale-revolution/#13c5a4ff7554 [Accessed 12 Nov. 2019]. (Lack,
2018)
3. Sloman, J. (2017). Oil prices – the ups and the downs. [Blog] Pearson. Available at:
https://pearsonblog.campaignserver.co.uk/oil-prices-the-ups-and-the-downs/ [Accessed
12 Nov. 2019]. (Sloman, 2017)
4. Hhj
5. Eia.gov. (2019). Energy & Financial Markets - Crudeoil - U.S. Energy Information
Administration (EIA). [online] Available at:
https://www.eia.gov/finance/markets/crudeoil/supply-opec.php [Accessed 12 Nov.
2019]. (Eia.gov, 2019)
6. Hgg
7. Urbi, J. (2018). Here's what drives the price of oil. [online] CNBC. Available at:
https://www.cnbc.com/2018/05/15/what-drives-oil-prices.html [Accessed 12 Nov. 2019].
8. Petroleum Marketing Annual 2001. (2002). [ebook] Washington, p.460. Available at:
https://books.google.com.np/books?
id=90lEAtajtP8C&pg=PR15&lpg=PR15&dq=why+oil+prices+fellin+2001&source=bl&ots
=OnrU_Ma-
ts&sig=ACfU3U05wQ8veP5dYtSlHhjdBePjKNBZ_A&hl=en&sa=X&ved=2ahUKEwjtlL-
z2uLlAhUBIbcAHTRbBx4Q6AEwCnoECAkQAQ#v=onepage&q=why%20oil%20prices
%20fellin%202001&f=false [Accessed 12 Nov. 2019]. (Petroleum Marketing Annual
2001, 2002)