How does the surplus of oil affect prices? After the US sanctions on Iran came into effect and the US elections left, the markets were more than ever under pressure. For more than three years, the oil market has been oversupplied by independent producers such as Russia or rock oil companies, According to many experts, the price of $ 80 is a fair price for all. It can be said that the current and expected conditions and variables will have a very difficult effect to be absorbed by some parties. Souvenir market fold.
It is an economic law, the supply and demand law, that explains the interaction between the supply of a resource and the demand for that resource. The theory defines the effect that the availability of a particular product and the desire (or demand) for that product has on its price. Generally, low supply and high demand increase price. In contrast, the higher the supply and the lower the demand, the price tends to fall. In other words, when you have surplus production or supply of any particular product the general trend of its price is to fall in the middle and long-term. In the specific case of oil when we have an overproduction or supply of oil products its price goes down in the middle or long term.
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