How does weak US dollar influence the price of crude oil?

In: Fossil Fuels

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Dollar is international currency and when the dollar is weak countries would be able to purchase more quantity of oil with lesser currency...however this is only when OPEC keep the prices stable

Crude oil is mainly traded in US dollars, and when the US dollar weakens the crude oil market participants (speculators, producers, refineries, etc.) push the price of crude higher on the expectations that oil producers are entitled to at least the same prices as before in their own currencies, after exchanging US dollars into their currency. In economics such relationships are explained by Purchasing Power Parity theory.

First answer by ID3411132483. Last edit by ID3411132483. Question popularity: 20 [recommend question]

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