Oil’s Vicious Cycles: Oil Production Does Not Matter, Exports Do

The objective of this article is to explain the spectacular rise in oil prices in recent years and state the factors that would prevent oil prices from declining in the coming years. Despite the divergence of views about the reasons for the increase in oil prices, a few facts stand out: 1) The oil market is not competitive; 2) Only market fundamentals, which, in this article, include oligopoly and monopsony powers, affect oil prices in the long run; 3) Political events, expectations, and physical storage of oil are part of market fundamentals.