Why is the oil industry considered to be an oligopoly?

The oil industry is considered an oligopoly because it is dominated by a small number of large firms, such as ExxonMobil, Chevron, and Royal Dutch Shell, which have significant control over pricing and production levels. These companies often engage in strategic interactions, influencing each other's decisions on production and pricing due to their interdependence. Additionally, high barriers to entry, such as substantial capital requirements and access to reserves, limit competition from new entrants. As a result, the few dominant players can effectively coordinate to maintain market stability and profitability.