There are many different demand factors that can affect the price of oil, including: the performance of the world's largest economies, market sentiment, and alternative energy.
Economies that provide significant demand for oil in the world include the United States, China, Europe, and India. Healthy economies usually increase the demand for oil, while stagnant economies usually have limited demand. So if there are any factors affecting healthy economies, it is certain that the oil market will be affected by them in the form of a demand shock. The most recent example of a demand shock is the COVID-19 pandemic, which saw countries enter and exit periods of lockdown and lockdown in early 2020. As a result of the restriction of domestic and international travel, businesses and industries have limited their operations, which has had a direct impact on the rate of oil demand.
Market sentiment and market speculation are often other major factors affecting the price of oil. The oil market is highly sensitive to speculation that is driven by factors such as economic indicators or rumours. This includes any speculation about future events, such as imminent sanctions on an oil-producing country, which in theory would amount to a cut in the oil supply and thus an increase in its price. On the other hand, the news that OPEC will increase production will lead to oversupply in the market and thus lower oil price.
Green energy, or alternative energy, has begun to present itself as a major factor affecting the demand for oil. During the past ten years, alternative energy has made its way to center stage, as governments increasingly look to sustainable energy, due to its positive impact on the environment among many other reasons. Technological advances in sustainable energy sectors make it an increasingly viable option, and this trend is expected to grow over the next few decades.