FACTORS RESPONSIBLE FOR GLOBAL OIL PRICE AND ITS POLICY IMPLICATIONS

Abstract

This paper qualitatively reviews the determinants of oil price volatility. The main aim
is to examine the fundamental factors that influence oil price change. The
unprecedented increase in oil prices after covid 19 pandemic has renewed the debate
over who are the real culprits responsible for this upward movement. These factors
have been established through a literature review relying on a constructivist theory.
The study identified the factors to include, demand and supply, that the growth for oil
in international markets of the United States and China are linked to oil price
behavior; OPEC behavior, the financial markets behavior, speculation, and conflict.
These oil price determinants were found to vary with time. By implication, they can
be conducive to increasing oil prices, particularly in the short run, although they are
not taken to be reciprocally restricted but complement one another or take turns in
sequential succession.