Why a little cut in oil supply can have a big impact on price
Why a little cut in oil supply can have a big impact on price
Saudi Arabia and Russia announced plans to cut their amounts of oil going onto the market. That has suppressed oil prices. The two countries make up a significant part of the oil market, but not that much. So why can a minor cut in supply affect the price worldwide? Because the oil market has something its watchers call “inelasticity.” When the supermarket’s out of strawberries, you buy apples. But there’s no substitute for oil, for the gas that runs our cars. We need it, and only it, meaning there’s little wiggle room when less is available.
Click the audio player above to hear the full story.
Stories You Might Like
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
