Most of us greet the news that oil has fallen to $50 a barrel with a shrug of our shoulders. It goes up, it goes down; no one dies. We fail to engage because we don’t understand what drives it either way, or how it affects us. As with all commodities, supply and demand plays a big part in its price. It peaked in 2008, but the subsequent global downturn saw it experience one of the sharpest drops in history.
Everything from war to the weather influences how much we pay for a refill at the petrol pumps. A contraction in the construction sector creates a fall in demand – and in prices, while striking workers in the oil industry can cause prices to shoot up. When the dollar dips oil becomes expensive, and political instability in oil-producing countries goes hand in hand with price volatility. We take a look at various factors that cause the price of oil to fluctuate.