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NISM Certifications · NISM-Series-XV: Research Analyst · Fundamental Analysis of Commodities

Which of the following developments would most likely push up the price of crude oil, other things being equal?

A supply disruption from conflict in a major producing region would most likely raise crude oil prices, because it reduces available supply while demand stays broadly unchanged. Higher output, weaker industrial demand or substitution away from oil would all push prices down.

  1. AA decision by major producers to raise output sharply
  2. BA global slowdown reducing industrial demand
  3. CA supply disruption caused by conflict in a major producing regionCorrect
  4. DA rapid shift of vehicles to electric power in all large economies overnight

Explanation

A supply disruption cuts available supply against steady demand, raising prices. Higher output, weaker demand and faster substitution all tend to lower prices.

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