 following the previous videos in this video I'm going to continue explaining the factors that are affecting crude oil price. In this video I will start with international economy. As we learned previously crude oil is an international commodities, a global commodity is being traded everywhere in the world. Every part of the world economy can have impact on the crude oil price. Some countries that are contributing to the biggest portion of crude oil consumption their economy can potentially have big impact on a crude oil price. So when trading starts early in the morning on the exchange in New York, Asian market is already closed and European market is at midday. So the behavior of the market, the signs of how market will behave they are already known. And probably the most watched nation these days outside of the US is China. China is contributing to around 15% of the world GDP and China is after the United States is the second largest consumer of crude oil. After China Japan used to be the third largest consumer of crude oil. After the Fukushima nuclear disaster Japan's import of fossil fuel increased but at the moment India is in the third place taking the Japan's place in oil consumption of the world. Also the European Union and Europe region is consuming around 22% of world crude oil and this data is from 2013. So economic growth in these regions that are large consumers of crude oil can influence the crude oil if the economy is doing good. If the economic growth rate is high it gives a signal that the demand in the future there will be high demand for crude oil in the future and if the economy is slowing down it means that the expected demand will not be as high as before. The increasing demand will be not as high as before and it is going to potentially affect the price of crude oil. The other factor that can potentially influence the crude oil price is the United States exchange rate as as you know crude oil is globally being traded in US dollar. So if the fluctuation of the exchange rate US dollar compared to the other currencies can potentially affect the crude oil price why because there are many traders outside of the United States and they are trading the crude oil which is being traded in US dollar. So if the dollar value decreases if dollar US dollar loses its value it means that those traders living outside of the United States will have higher buying power so they can buy more crude oil futures contract. It means that there will be higher demand from outside of the United States. It will increase the demand of crude oil and can potentially increase the price. So usually there is a strong correlation negative correlation between United States US dollar value and crude oil price. During the periods of a strong US dollar foreign traders investors try to sell their future contracts and when the US dollar loses its value they tend to buy more contracts. The other factor that can impact the price of oil is geopolitical events especially in the regions that are big producers of oil. Any conflict or potential conflict can impact the prices. Any news that can give the sense of potential interruption in supply can increase the price. Please note that it doesn't need to it doesn't necessarily need something to happen that entrop the supply. Traders are also humans they are they behave emotionally they can react to the news in an emotional way. So if news says some potential conflict in the region that's producing large producing countries are located it can potentially affect the perception of the supply in the future. It can entrop the supply or it could potentially interrupt the supply or it can influence the perception of the supply in the future and can have significant impact on the crude oil prices. For example in mid-June 2014 WTI West Texas Intermediate crude oil price was about 107 dollars per barrel and at the end of that year it went down to around 54 dollars per barrel. We can explain this price behavior into two major factors that influence the price. First the increased supply of oil in the United States coming from mostly coming from unconventional reservoirs shale and tight sense because the price of oil was high and at this price at around 100 it's totally economically feasible to produce oil from costly unconventional reserves. Around this time Saudi Arabia that is one of the largest producer an exporter of crude oil tried to maintain the market share by flooding the market with cheap oil but this strategy caused excess supply and price to drop substantially. Low price of oil can have large impact on oil producing countries that are highly dependent on the revenue from oil. Also in the United States companies who are working on the exploration and production section of oil they will have to cut back on exploration and drilling activities because they lose their revenue and potentially if the price is too low they can potentially the small companies they can go bankrupt. The other major player in the oil global market is OPEC or the Organization of Petroleum Exporting Countries. OPEC was formed in 1960 by the first five member including Iran, Iraq, Kuwait, Saudi Arabia in Venezuela and right now at the moment 2017 it has 14 members. OPEC produces around 43% of the world's total crude oil in 2015 and OPEC members control about 73% of world's total oil reserves. So every decision that OPEC member every agreement or even the meetings that don't come to an agreement can potentially affect the price of crude oil. For example if OPEC members come to an agreement and they cut back the production it can cause the supply the whole supply to decrease and eventually cause price increase. And if in their meetings let's say that there's a time and there's a conflict and it's also politics also also involved always involved in in the decisions if there is a period that price are going down and they cannot come into an agreement for cutting back the production then it can potentially affect market prices and can potentially cannot stop the price decrease.