OPEC

The two oil crises of the 1970s are notorious. In 1973, the oil price went from $3 a barrel to $12 a barrel in two weeks, and in 1979 the oil price rose from $12 a barrel to $33 a barrel. OPEC’s power was great in the 1970s. OPEC’s market share is now rising. This year, moreover, demand for oil will exceed supply for the first time.

Last year, oil prices already rose by 50 per cent. A new oil crisis is in the offing. 

Ultimately, the price of oil is determined by supply and demand. What is special about the oil price is that, in theory, there are several equilibrium prices. This is because a large part of the supply is linked to a state budget. Where normally the supply goes down when the oil price goes down, there are countries that in the past pumped more oil to realise the same yield.

Knowing that the final price is determined by the marginal buyer and the marginal seller, identifying these two parties is essential for predicting the oil price.