Anticipation of insufficient supply normally increases the necessity for acquisition of buffer quantities, while delays in the system contribute to scarcity of the products leading to spikes in the fuel.
Unlike in the boom period, such spikes are not backed by increased productivity, thereby leading to recessionary effects. Supply of oil is also dependent on the amount of oil deposits on the global scale. Oil reserves are not perpetual in nature and are bound to run out of crude. As a result, when the petroleum minerals run out, then the supply is bound to reduce leading to psychological reactions in the market, which normally result in increase in the price.
The supply will also depend on the price of the crude. Highly priced crude will attract no demand however much the supply. Oil exporting countries have to ensure that the prices of the crude oil are affordable in the least otherwise if the consumers cannot afford the products, then no revenues will accrue. For this reason, the oil producers have established ties with the consumers of these products and the world economies in order to ensure that the sector runs smoothly. The institutional regulators such as OPEC have handed out quotas to ensure that the supply of oil is not severely affected by dominance from one oil export. Through the quota system, the oil exporting nations have acquired production units with expandable capacity to ensure that any slacks are taken care of. This has also enabled the region to benefit evenly from proceeds of oil depending on their capacity.
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