Oil price is influenced by an extensive set of circumstances. One of the starring roles in determining oil price over medium and longer terms is global political and security events, as well as economic trends. It was once believed that these events can only lift the prices, and that low prices only come as a result of a fairly long period of global stability.

Some of the leading oil exporting countries are situated in areas where risk of war, terrorism, political unrests and riots are more common than elsewhere. For most of these places, such as the Middle East, oil is not the main reason that makes these areas troublesome, as they used to be like that before the oil there was discovered and before it found a wide application.

oil demand forecast eiaCurrently, oil prices hit record low, due to a mix of various events. The global economic downturn which originated in the US in late 2008 and had a great impact on the world economy through 2010 is over, but the world is recovering very slowly. Even though some parts of the world such as China and India are experiencing a real economic boom, overall global economic growth is still weak and the oil demand is not growing really fast.

Today, many countries invest in oil extraction and export, and international competition is greater than ever. Modern technologies are another factor, which prevents increase in demand, especially in developed countries. The result is that despite the ongoing conflict in Iraq and Syria, Western sanctions against Russia and instability in some other oil exporting countries, like Libya and Venezuela, oil reaches one of the lowest prices in decades. There come some of the latest news, including Iran’s nuclear agreement which allowed them to renew oil exports, and the Islamic State’s weak position in Syria. These events will have a full impact on oil price in 2016, when it’s expected for Iran to reach full scale oil extraction. The events in Syria, Iraq and Libya also show signs of improving, as the Islamic State expansion seems stopped.

Major economic event currently pushing oil price down is the Greek debt crisis which can cause an economic downturn in Europe. If the solution is not found in the following months, the European Union will find itself in another wave of recession, which means lower oil demand. As the EU is the world’s largest economic system, such an event would push down the entire global economy, similar to what happened after 2008-09 US mortgage crisis.

And finally, technological advent brings us things which allow us to work and live effectively with less oil consumed. High efficiency car engines, oil heat furnaces, jet engines, ships, locomotives, and fully electric vehicles made an economic growth without growth in oil consumption necessary. This is very important as the notorious peak oil date is now postponed. All peak oil forecasts took only economic growth in account, along with assumption that oil demand will be on a consistent rise.

Oil price will almost certainly remain low next season, and similar trend would continue through 2016 and years afterwards. It will almost certainly grow a little in the next few months but will remain at much lower the point compared to the same time in 2013 and 2014.