Oil Prices: A Complex Dance of Global Factors

Oil prices are influenced by various factors, including conflict, OPEC's control over supply and exports, global economic health, oil market participants' trading practices, and extreme weather events. The value of extracted oil is derived from two main factors: oil density (or API gravity) and sulfur content. Light crude has a higher API gravity and flows more easily than heavy crude.

The Organization of the Petroleum Exporting Countries (OPEC), which consists of over a dozen member countries, plays a significant role in controlling supply and exports to affect global prices. The price of oil is also influenced by benchmarks such as Brent and WTI, which are used as reference points for financial markets worldwide.

Brent and WTI track light, sweet-ish crudes but can differ due to the way prices are originated. Spot prices reflect physical barrels delivered right now and can be higher or lower than futures depending on whether the global market is tight or looser on any given day.