National Affairs News

Oil Prices Explained: Supply, Speculation, and the Strait of Hormuz

An accessible explainer on why oil prices surge: crude is formed from ancient plankton and refined into fuels, but the price is driven by a mix of physical supply and demand plus traders’ moods in the futures market. OPEC and strategic reserves influence available supply, while geopolitical shocks in the Middle East—especially around the Strait of Hormuz—can trigger sharp price moves as flow is threatened and fear rises, with wider effects on inflation and the global economy.