SINGAPORE - Petrol and diesel prices have been on a roller-coaster ride in the last two years, sinking to below $2 a litre when the Covid-19 pandemic arrived to more than $4 earlier this year. Now, pump prices are sliding again on the back of falling crude oil prices. But is the price of oil the only determinant of pump prices? And if not, what other factors are at play? But, first of all, let us look at why oil prices are falling, when everything else seems to be rising.

Besides supply and demand, oil prices are affected by geopolitical factors such as military conflicts, trade embargoes and even assassinations. They are also affected by the cartel-like behaviour of the Organisation of the Petroleum Exporting Countries (Opec), whose members are the world’s largest oil producers. Opec will adjust production accordingly to keep prices stable. Last but not least, prices are also affected by traders, who are effectively speculators.