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On top of them supply and demand .. Learn the basics of the global oil market

Demand and supply are the main determinants of the price of oil, just like any other commodity, and other factors contribute to its impact on oil prices by contributing to the effect on demand and supply of oil, while economic and social growth, population growth rates and income levels contribute to the effect on the size Demand for oil.


A study of the Organization of Arab Petroleum Exporting Countries (OAPEC), under the title: The Relationship between Spot Prices and Future Prices of Oil and its Implications for Global Oil Markets, stated that the levels of surplus production capacities of the member states of the Organization of Petroleum Exporting Countries (OPEC), and the volume of investments in expanding global production capacities. The geopolitical crises and natural disasters affect the volume of oil supplies. Oil reserves, especially commercial ones, in industrialized countries, and their sufficiency in the number of days of consumption are among the main indicators of the balance between global supply and demand for oil.


The study added that oil reserves can be used to influence the volume of oil demand when consuming countries withdraw quantities from their commercial stocks, and the volume of oil demand decreases, forcing OPEC countries to reduce their production quotas to maintain market balance, which causes their production capacities to rise. The surplus, and in return, the construction operations in the commercial stock contribute to affecting the volume of demand by raising its levels, forcing OPEC countries to increase their production quotas and pump more oil to maintain the balance of the markets.



The study indicated that the refining capabilities and production capacities of global oil refineries and investment allocations in the subsequent industries sector are also an important and dual-effect on demand and supply, while the capabilities of the refineries and their technical specifications determine the quality of the oils that can be processed, the production capacities of these refineries determine the volume of demand for these raw materials. And the production capacities of global oil refineries are determined at the same time by the size of the supply of petroleum products.