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This WTI crude oil price chart shows what really affects oil prices, and it isn't as obvious as you think.
Many observers make the mistake of assuming the price of oil is determined by simple supply and demand, like many other products.
However, Dr. Kent Moors, Money Morning's Global Energy Strategist, explains that "when it comes to the international oil market, geopolitics always trumps market dynamics."
Below, we've put together a chart that shows exactly how important geopolitical events are to the price of oil…
The 2016 WTI Crude Oil Price Chart Shows the Impact of Geopolitics
These are the major geopolitical events identified on the 2016 WTI crude oil chart:
- Jan. 16 – International sanctions against Iran were lifted. Between Jan. 15 and Jan. 20, WTI crude oil prices fell by 11.5%.
- Feb. 16 – Russia and Saudi Arabia publicly agree to freeze oil production. WTI crude oil prices jumped 6.7% by the next day.
- April 7 – The struggle for control of Libya's oil reaches its climax. The oil price climbed 12.3% in three days of trading.
- June 10 – Reports that China hit its oil storage capacity. Oil prices fell by 8.8% in one week.
- June 24 – Brexit: The United Kingdom voted to leave the European Union. Crude oil prices dropped 6.4% by the end of the day.
- July 15 – An attempted military coup takes place in Turkey on Friday. By Monday oil fell 3.2%, and by the end of the week it had fallen 6.5%.
- Aug. 11 – Saudi Arabia announces a plan to lead an OPEC production cap. Crude oil prices soared 15% in the week after the announcement.
- Sept. 28 – OPEC agreement to cap oil production. Crude oil rose 9.2% by the end of the week.
These geopolitical events corresponded with some of the biggest shifts in the price of crude oil in 2016. Simply looking at raw numbers to calculate supply and demand isn't enough to understand changes in the price of oil.
And geopolitical events will continue to be the biggest driver of oil prices. Below we've analyzed the next major geopolitical event that will shake up the oil market…