What is oil price?

The price of oil, or the oil price, generally refers to the spot price of a barrel (159 litres) of benchmark crude oil —a reference price for buyers and sellers of crude oil such as West Texas Intermediate (WTI), Brent Crude, Dubai Crude, OPEC Reference Basket, Tapis crude, Bonny Light, Urals oil, Isthmus, and Western Canadian Select (WCS).

How is crude oil extracted?

Crude oil is extracted from underground oil reserves. In Brent crude oil’s instance, these reserves are under the seafloor, while WTI crude oil is extracted from reserves located under dry land. That’s the first component of oil prices — the extraction process and machinery required.

What determines the price of a barrel of oil?

There is a differential in the price of a barrel of oil based on its grade—determined by factors such as its specific gravity or API gravity and its sulfur content—and its location—for example, its proximity to tidewater and refineries.

Could low oil prices reduce the resource curse?

Low oil prices could alleviate some of the negative effects associated with the resource curse, such as authoritarian rule and gender inequality. Lower oil prices could however also lead to domestic turmoil and diversionary war.