If the U.S. dollar is the standard currency for purchasing crude oil why does the price of crude oil vary with the value of the dollar against other foreign currencies? What is the ACTUAL standard against which the price of crude oil is set?
Answers (3)
Three major forces set the price for crude oil:
1. Supply and demand;
2. Speculators (traders, banks, investment firms);
3. Marketing and the illusion of value (similar to what occurs with diamonds; diamonds cost as much as they do because marketers have successfully convinced the public that "diamonds are forever", amongst other things)