Market forces largely determine oil and gas prices. According to a study conducted by Akinrolabu and Haruna on the Organization of the Petroleum Exporting Countries (OPEC) at 60 years, by December 2020, oil was plentiful and in high demand. Oil prices are influenced by various factors, including the fundamental economic notion of demand and supply. As per Thorbecke, if the supply of goods and services increases, prices consequently fall, and if the commodities’ demand increases, prices rise in response.
The oil consumption industry comprises a variety of firms and hundreds of millions of individuals who work together to affect oil prices. In addition, crude oil output has been discovered lately to impact oil prices, especially in nations that produce the greatest quantity of crude oil per capita, like Russia.
With the current inversion of Ukraine by the Russian Army, the gas market has been in a constant indeterminate state as various sanctions against Russia have created disruptions in the supply of gas. Russia is one of the world’s largest oil and natural gas producers, and the sanction interruptions significantly influence prices, as is witnessed currently.
This is because the global demand for gas has remained constant as the supply continues to diminish due to reduced supply, majorly from Russia, putting the market at a disequilibrium. With President Joe Biden prohibiting the importation of Russian coal, natural gas, and oil, oil prices have continued to soar much higher than they were before. However, The White House is spearheading efforts to reroute energy supplies to Europe and across as part of an attempt to avert such a catastrophe.