Factors Influencing Crude Oil Prices in the UK: 2010-2020

This report provides a comprehensive analysis of crude oil prices in the UK from 2010 to 2020, examining the fluctuating trends and key determinants. It delves into the average price variations over the decade, highlighting significant price changes and the underlying economic factors that influenced them. The report explores the role of OPEC, supply and demand dynamics, natural disasters, political factors, production costs, and interest rates in shaping oil prices. Furthermore, it assesses the impact of government actions, including Brexit, on the UK market. The analysis also considers the immediate and long-term effects of the COVID-19 pandemic on crude oil prices, offering a holistic view of the contemporary business environment within the context of the oil industry. The report concludes with a synthesis of the findings, summarizing the complex interplay of factors that drive oil price movements in the UK.

Contemporary
Business Environment

Contents
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
Average prices of crude oil over the time period between 2010 – 2020 in UK...........................3
Economic determinates which lead to the changes into the prices of crude oil...........................4
Government actions which has affected the working of UK market...........................................6
The immediate and further effect of COVID 19 at the prices of crude oil..................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
The business and its surrounding environment do get change with time. With time the
types of resources used, capital involved, structures, skills required and the like gets different
according to the external requirements. This report discusses about the external business
environment which has been observed along the way. For this particular the changes which has
yet occurred in the field of crude oil has been observed and stated. This may include the changes
in prices from 2010- 2020, factors which have caused the changes into to prices of the same and
its related impact has also been discussed into this report.
TASK
Average prices of crude oil over the time period between 2010 – 2020 in UK
The prices of any resource are considered according to its scarcity into the market place.
The crude oil is such a resource which is becoming scare year by year and as it is becoming scare
its prices associated is also becoming very high. The more scare that resource will be the high
would its prices get. The prices between 2009 & 2014 were stable, as they were in the range of
$20 – 30 for maximum of period. A fall into the prices of oil was also observed during this
period before the Iraq invasion in the early of March. The prices fall by approx 10$ for a barrel.
The prices of crude oil in UK started keeping its increase from 2004. On 7 August 2006
the prices for the same reached to its peak, $78.30 per barrel. But in the second half of the year
2006 the prices of the oil start when to a down and the trend got changed a bit. The prices went
below $ 52 a barrel at the starting of 2007. This trend was in continuation from 2007 to the
summer of 2008. The prices were below $ 52 for a barrel. In the end of November of the year
2007, the level of prices went up to $ 90 - $ 95 for a barrel, which is very much costly for the
people to afford. Moreover the prices also went a between the period of November 2007 –
February 2008, in which the prices were went to $ 100 for a barrel (Aksenov, 2017). The trend
for increase into the prices kept on, as the country UK prices for oil kept on increasing from
month by month. Like the prices in the month of April 2008 went to 110 $ per barrel, $120 in the
month of May, $130 in the month of late of may and it was above $140 a barrel in the month of
late June. But thank fully the situation went in control after the second part of the year 2008 in
which the prices for the crude oil went to decrease with a rapid speed. a serious spell of chilly
climate across quite a bit of Europe in late January/early February 2012 and expanding strain
between Iran furthermore, the West were both said to have added to pushing costs above $120
per barrel in February 2012.
 Poor monetary news in spring 2012 assisted with cutting costs by around $35 per barrel
among April and June.
 At the beginning of 2013 a mix of better financial possibilities for the US and China and
occasional interest pushed costs up towards $120 per barrel in mid February.

 Prices quickly fell underneath $100 per barrel in April 2013 and stayed at simply over
this level for a great part of the following two months as assumption on world financial
possibilities, and those of China especially, changed once more.
Heightened pressure over Syria added to the value rises later in he year and costs were above
$115 in early fall (Amankwah-Amoah and Wang, 2019).
In the year 2010 – 2011, the prices for the crude oil were around $75 for a barrel in the
month of July and August but again it went on a rise in December with e price of more than $ 90
a barrel. In the year 2011, in late January and February the prices went to the highest since 2008,
$125 a barrel. Between the years 2011 to 2014 the country faces the stability and high trend into
the prices of oil. The prices were $ 125 per barrel in the year 2012 which went to an immense
decrease due to economic crisis which lead to the low in prices by $ 35 a barrel for the month
between April and June. For the period between 2014- 2016 the prices for the oil collapses, as in
the second half of the year 2014 the prices went below $50 for a barrel and in the year 2016 it
went to $27 for barrel which was considered the lowest since 2003. Apart from this an increase
into the prices of oil has been noticed between 2016 & 2020.
In 2020, due to COVID 19 pandemic, the demand for the crude oil gets to an immense
decrease and due to this the prices went to $ 40 per barrel in the month of June, 2020.
Economic determinates which lead to the changes into the prices of crude oil
There are various determinates which had lead to changes in the prices of crude oil, some
of them are as follows:
OPEC: OPEC stands for Organisation of Petroleum Exporting Countries. It is an organisation
which is responsible for influencing or controlling the prices for oil. It is made up of 13
countries; some of them include Algeria, Congo, Iran, Iraq, Libya, United Arab Emirates and etc.
According to the reports of Statistics, this organisation controls about 80% of the total supply of
oil and its reserve into the world. This organisation sets the supply of the oil by calculating the
total demand demanded by the world. They set the production which will meet the demand and
influences the related prices for oil and gas through increase and decrease in its production
(Beynon-Davies, 2020). The OPEC has decided to keep the prices for oil above $ 100 per barrel
for a predictable future, but into the year of mid 2014 the oil prices started to tumble. The prices
started to get a decrease from $100 a barrel to $ 50 a barrel. Behind all the decrease in prices of
oil, OPEC was behind all them as they did not reduced the production of oil production which
leads to proper supply of oils and gas and tumble into its prices.
Impact of supply and demand: The prices of any commodity are decided by its availability into
the market. When the supply or the availability of the commodity is high then its prices would be
low but if the supply for the product is low and its demand is high then the prices gets increase in
the year 2014 the prices of the oil gets reduced because OPEC did not reduced the production of
oil which caused the decrease in the price of oil. As the supply of the commodity increase and

the demand for the same get decreased, due to the excess demand the prices got reduced. The oil
prices get fluctuated from that time and since then the prices were around $ 60 a barrel. While
gracefully and request sway oil costs, it is really oil prospects that set the cost of oil. A fates
contract for oil is an official understanding that gives a purchaser the option to purchase a barrel
of oil at a set cost later on (Boone, Kurtz and Berston, 2019). As explained in the agreement, the
purchaser and vender of the oil are required to finish the exchange on the particular date.
Natural disaster and political factors: Any natural disaster is also responsible into the
fluctuations into the prices of Crude oil. For example a disaster happens into any oil reserve can
put a great impact upon the prices of crude oil. For example the floods in Mississippi river
caused into the fluctuations into the prices of oil. Any such incident into the production house of
oil and gas do affects its production and supply of the same into the market. Therefore the cause
of natural disaster does play a major role for the fluctuations into the prices. The political factor
is the interference of government into the industries. It includes the rules and regulations which
are formed by the government only. The prices of oil have been set high by the UK government
also to cover their economic crisis. Other factor also includes the exchange prices or rates of
other economies in which the country UK performs trade with the other countries. The Iraq
invasion with UK also putted impact upon the prices of Oil and gas on UK as it went on an
increase. Although the political government into UK is very much stable but the rules and
regulations regarding the prices of oil and gas is very unstable. Any change in the exchange rate
counts into political factor, when the prices for dollar gets increase or decrease it puts the impact
upon the trade.
Production costs: The cost for production does impact upon the prices of oil in the UK. When
the country imports oil from other country, the costs for its transport, for purchase, for security
and etc gets added into the actual cost which leads the cost high. But if the country UK, produces
or sells the oil which has been extracted into their country only then their cost would be
relatively cheap (Cherunilam, 2016). For example the prices of oil in Iraq is cheap as it is the
place where oil gets produce therefore they need to have to add up the prices for transport,
security and etc. This lead into the fluctuations into prices of crude oil in UK.
Interest rate: Interest rates which are associated with the buying and production of oil from the
country do play an important role into setting the prices of oil. When the interest rate is high then
the actual prices for the oil would also be high but when the interest rates are low, the prices for
the oil would be comparatively low. One of the essential speculations specifies that expanding
financing costs raise buyers' and producers' costs, which diminishes the measure of time and cash
individuals spend driving. Less individuals out and about means less interest for oil, which can
cause oil costs to drop. In this occasion, we'd call this a converse relationship.
By this equivalent hypothesis, when financing costs drop, purchasers and organizations can
acquire and go through cash all the more openly, this drives up interest for oil (Tempelman,

2020). The more noteworthy the use of oil, which has OPEC-forced cut-off points on creation
sums, the more buyers offer up the cost.
Government actions which has affected the working of UK market
There were many actions which were taken by the government has affect the market for
UK. Some of their actions are as:
Brexit: Brexit is the exit of Britain from European Union. European Union is a treaty which was
formed among 28 countries in UK. In this treaty how the countries involved into the agreement
would grow and prosper equally. The true purpose of that treaty was the equal distribution of
resources and the growth opportunities of other countries also in UK. When the Britain gets an
exit from the EU then there were many difficulties which other countries along with Britain had
to face (Erl, Khattak and Buhler, 2016). Due to Brexit the prices of majority of commodities
went to increase as there were scare for the resource and the prices of some resources get
decreased. Brexit agreement caused a havoc into UK, the transports for the goods and services
were get stopped, there were also an probation on migration where people cannot go to Britain
and Britain people cannot go to the countries which are part with EU. In all these, the transport
for oil and gas also faced major problem. This did cause an increase into the prices for oil. Apart
from this the availability for the oil was very limited causing the problem for people. The
decision taken by the UK government of Brexit had caused a lot into UK. The prices and
availability of other commodities apart from oil also gets increased which was quite unaffordable
by the people. .
Political unrest among different countries: Every country has some conflict with one or other
countries. The political uses of UK with other countries like Middle East, Iraq and etc has caused
trouble into the imports for Crude oil. As these countries are getting into the argument with UK,
the terms and conditions do not get at common ground by any of this party involved. That’s why
prices for the oil get increase because trade with such countries gets higher for UK. For example
the Iraq invasion had caused into the increase in prices for crude oil in UK. The country UK has
to go through with all these increase in prices irrespective that they can afford it or not. In
addition to this the revolt with Libya also had contributed in increase into the prices for oil in the
year 2011 (Hamilton and Webster, 2018). The prices went to an increase from $ 70 per barrel to
$ 90 per barrel.
Rise in supply: If the government of UK does not reduce the production or the supply for oil
then the market for the UK will have ample amount of supply for oil which would ultimately will
reduce the price for oil also. Sufficient or over supply of resources would automatically reduce
the prices for that resource. But when the UK government curbs the supply for the same then the
prices for the oil went in a hike because it becomes a scare resource into the market and oil is a
source for which the demand would never get decreased. Therefore the supply by government
impacts the market of UK.

The immediate and further effect of COVID 19 at the prices of crude oil
The Coronavirus episode, at first in China, at that point spreading to the remainder of the
world, and the lockdowns acquainted with control its spread, prompted a emotional cut popular.
The International Energy Agency anticipates worldwide request to fall by around 8 million
barrels for every day; 2 the biggest fall in history. This fall sought after prompted an oversupply
of oil and a quick develop of stocks. Costs tumbled from more than $65 per barrel in January to
$50 in late February and $25 per barrel in mid-March. After an unobtrusive ascent they fell again
to beneath $25 per barrel in April 2020, the most minimal since February 2002. They have since
recouped to more than $40 per barrel in June as a few nations ease lockdown limitations and
OPEC presented record cuts in creation.
As in this pandemic time where the whole world has chosen for locking down its operations and
activities, all the activities of whole economy of the world has shut. The usage for crude oil has
also get reduced at its minimum. The use for crude oil gets reduces because the people do not
travel, they do not go out of their homes because of the COVID 19 pandemic (Lenart-Gansiniec,
2018). And as they are not travelling the use for crude oil is getting minimum. It is very common
to observe that when the demand for any commodity decreases, its prices also get decrease. At
the lockdown period where everybody were forced to sit at home the demand for the crude oil
was nil which had lead to the decrease into the prices for crude oil. But as soon as the process for
unlocking the state has begun, people would start resuming their travel and daily activities, the
demand for crude oil will also get its earlier phase with time. Slowly but steadily the demand for
the crude oil will again take its phase as earlier and as soon as the demand would get increase the
prices for the product would gets an increase. Slowly but steadily the prices would increased but
it will not get to an extreme.
But as soon as the country would take its phase back the prices for the crude oil will increase
with a slow speed. The prices for the crude oil would be low because they know that it is a
crucial resource for any human being and at these pandemic time majority of people disposable
income has gone low because of nil into the production activities, cut outs into salaries, cut outs
in employments number in an organisation which has lead to increase in employment. The public
does not have enough money to pay for their bills and expenses. In such time they also cannot
afford the high prices for crude oil which is considered as a necessary thing for any human.
Therefore the prices for the crude oil will get increase with time but not too much that a human
cannot afford (Liu and Stening, 2016). Later when the condition and the situation for the whole
economy gets normal then the prices for the same can take a hike.
CONCLUSION
The report presented above, discusses about the prices for crude oil over the time period
between 2010- 2020. The report includes the reasons behind such fluctuations into the prices,
some of which includes interest rate, demand and supply, political factor and so on. There are

various government actions also which can change the economy for UK market which includes
Brexit, production, political unrest among different countries and so on (Namvar and et. al.,
2018). Apart from this the impact on the prices of crude oil due to COVID 19 and after COVID
19 has also been discussed.

REFERENCES
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