What Moves Oil Prices?

1. OPEC+ production policy

OPEC's members and their allies, led by Russia (together known as OPEC+), have historically produced about 40% of the world's crude. OPEC has had 11 members since the United Arab Emirates left the group, and OPEC+, on 1 May 2026. Saudi Arabia holds most of the world's spare capacity. When OPEC+ cuts quotas, prices usually rise. When it raises output, or members produce above quota, prices fall. Watch for:

• ministerial and Joint Ministerial Monitoring Committee (JMMC) meetings
• Saudi official selling prices (OSPs), announced monthly, which signal how Riyadh sees demand
• compliance figures in OPEC's Monthly Oil Market Report

2. Inventories

Inventories are the market's shock absorber. Falling stocks mean demand is outrunning supply, and prices rise. Building stocks signal a surplus. The most timely data is from the US: the API on Tuesday and the EIA Weekly Petroleum Status Report on Wednesday. OECD commercial stocks, reported monthly by the IEA, give the global picture. Analysts compare stock levels with their five-year average.

3. Demand growth

Global oil demand is about 100–105 million barrels per day. It typically grows by 1–2 million b/d in a healthy economy and falls in recessions. The key indicators are Chinese imports and refinery runs, Indian demand, US gasoline and distillate consumption, jet fuel use and purchasing managers' indices (PMIs). Over the long term, efficiency, electric vehicles and petrochemical demand shape the outlook.

4. Non-OPEC supply

The US is the world's largest producer, with crude output above 13 million b/d. Brazil, Guyana, Canada and Norway have added significant volumes. Shale responds to price within about 6–12 months, which limits how long high prices can last. Watch the Baker Hughes rig count, completion activity and shale companies' capital budgets.

5. Spare capacity

Spare capacity is production that can be brought online within about 30–90 days and sustained. It sits mainly in Saudi Arabia, the UAE and Kuwait, and most of it has to be exported through the Strait of Hormuz, which is why the 2026 disruption there hit prices so hard. When it is ample, outages hardly move prices. When it is thin, as in 2008 and 2022, even small disruptions cause spikes. This explains why the same headline can move prices by $1 one year and $10 another.

6. Geopolitics and supply risk

The main chokepoints are the Strait of Hormuz, where about a fifth of global oil consumption passes, the Bab el-Mandeb and Red Sea route, and the Turkish Straits. Producers with recurring supply risk include Libya, Nigeria, Venezuela, Iran and Russia. The market adds a "risk premium" when threats rise and removes it quickly once they pass without lost barrels.

7. The US dollar

Oil is priced in US dollars. A stronger dollar makes oil more expensive for buyers paying in euros, yen or rupees, which weighs on demand and prices. A weaker dollar has the opposite effect. The relationship is not fixed, but it is visible over longer periods. Compare oil with the US Dollar Index (DXY) on the chart.

8. Interest rates and financial flows

Higher interest rates slow economic growth and raise the cost of holding inventory. That tends to push the futures curve towards contango and weigh on prices. Money managers, including hedge funds, commodity trading advisers (CTAs) and index investors, can amplify moves. The CFTC's Commitments of Traders report shows their positioning every Friday. Very crowded positions often reverse sharply.

9. The futures curve and refining margins

Backwardation (near months above later months) signals tightness and makes it costly to hold short positions. Contango signals surplus. Refining margins, or crack spreads, show whether refiners have an incentive to buy more crude. Strong gasoline and diesel cracks support crude prices.