oil pricing theories

Oil pricing theories explain how the price of crude oil is determined in global markets. Key factors include supply and demand, geopolitical events, and economic conditions. The supply side examines production levels from OPEC and non-OPEC countries, while demand considers consumption patterns in major economies. Additionally, factors like currency fluctuations (often priced in dollars), market speculation, and technological advances in extraction also play a role. Theories like the Efficient Market Hypothesis suggest prices reflect all available information, while others, like the Risk Premium, account for uncertainties and risks in production and delivery.