During the latter part of 2014 the oil price fell from well over $100 Essay

During the latter part of 2014 the crude price fell from well over $100 per barrel to around $50 per barrel. Why might this sudden fall bewilder occurred and how will it affect economies around the world - Essay ExampleThe theories of aggregate demand and supply have been linked with the fall in price of oil to understand the macroeconomic policy (Arnhem, 2014).The traders who are prudent for setting the prices are to consider the current payoff and supply of oil before bidding for the prices. Other factors are the future supply of oil that is the capacity of the oil reserves. These reserves play a crucial role when the price of oil gets too high and in case when the demand exceeds the supply. The third factor to be taken into account is the demand for oil in the economy. The demand and the supply of oil are the essential components responsible for the changes in the oil prices. The global demand for oil is less than supply and that is responsible for the fall in oil prices. A m ajor factor for fluctuation of the prices was the sudden improver in oil production in the US. This had resulted fall in the crude oil prices (Times Internet Limited, 2015). It was also observed that in order to keep the oil prices high, Saudi Arabia the largest exporter of petroleum reduced the oil prices affecting the economy. Moreover, the increase in production was also observed in Libya and Angola that raised the total output of the Organization of Petroleum Exporting Countries (OPEC). OPEC is an organization that that controls the production of oil in the world. Currently, the members of the OPEC are pumping 42 percent of the global annual supply. The organization is also responsible for controlling the exports of the petroleum. The member countries also support the oil reserves in case of excess demand. Therefore, for this reason OPECs decisions regarding control of oil prices are crucial for those countries dependent on import of oil (Bloomberg L.P, 2014). The economic acti vities are influenced by the demand for the energy resources. The supply of oil is also