What is the reason for high Oil prices?

High crude oil prices could be due to a shortage of oil supplies. High prices for oil products - as purchased by end consumers such as motorists - are more likely to reflect other factors, such as taxation.

Crude oil prices react to the balance of demand and supply in the short term, and the rate of investment in the longer term. If investment is not made far enough in advance, oil supplies could be limited in the longer term, thus raising prices.

Sentiment is also an important factor: if traders in the oil market believe there will be a shortage of oil supplies, they may raise prices before a shortage actually occurs.

Other factors influencing the price of crude oil include accidents, bad weather, increasing demand, halting transport of oil from producers, labour disputes (strikes) as well as other disruptions to production including war and natural disasters.

Crude oil now represents less than a quarter of the price of oil products in many countries. Therefore, taxes have more influence over the price of oil products.

When oil taxes are raised, end consumers often mistakenly blame the oil producers, but it is really their own governments that are responsible.

OPEC seeks a stable oil market, without sudden price changes or excessively high or low prices.

OPEC regularly meets with other oil producers and with consumers in an effort to improve understanding and trust in the oil industry and to seek policies and measures that do not create unnecessary economic hardship for oil producers or consumers.

Source - Commodity Online