What are the factors that cause a decrease in the supply of petroleum?

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mkoren eNotes educator| Certified Educator

There are factors that can lead to a decrease in the supply of petroleum or oil. One of those factors is the price of oil. If the price of oil drops too low, it becomes unprofitable for companies or countries to drill for oil, especially if they have to drill deep into the earth to reach it. It is more expensive to drill deep into the earth. Thus, a low price for oil may make it unprofitable to drill for oil.

Another factor that could lead to a decrease in the supply of oil is if the demand for oil drops. If the demand for oil drops and the supply remains unchanged, the price of oil will decrease. Thus, a lower demand may lead to a lower supply to keep prices at current levels.

Global conflicts could also lead to a decrease in the supply of oil. If there is political instability in oil producing countries, or if a war breaks out in oil producing regions, the supply of oil may be disrupted. It may be too dangerous to ship the oil because of the conflict. It may also be more difficult to drill for oil if a war is going on or if there is political instability.

There are factors that could lead to a decrease in the supply of oil.