Demand

The price of crude oil, a major component of the pump price, can fluctuate greatly and is ultimately driven by supply and demand for oil on a global scale, meaning that demand or events in one country can affect prices at your local petrol station.

Almost all manufactured goods rely on oil at some stage in their production - whether for energy, transportation or raw materials. It is no surprise then that the availability and demand for crude oil, and therefore its price, has a major impact not only on fuel prices, but also on national and global economies. It can directly affect inflation and employment as well as national and global recessions. Many different players buy and sell crude - oil producing nations, oil companies, individual refineries and oil importing nations.

The price of crude oil is set by supply and demand and influenced by factors such as the weather, stock levels, political events and market sentiment (just like the stock market). This influence is due to their potential impact on the supply of crude available to/in the market.

As nations develop so do their demands for energy, notably oil. China and India’s continued economic growth and development has helped increase the overall demand for crude oil, and this increased demand puts upward pressure on the overall price.

Crude oil and refined product are traded on the open market and are therefore subject to market speculation, which impacts prices. In recent years, there have also been new entrants and increased interest in the oil commodities market, mainly from investment funds and hedge fund managers. It is widely believed that this has added to the volatility of oil prices.

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