How does an oil embargo affect the prices of oil?

When the supply of oil is reduced as happens with an oil embargo without a fall in demand, up goes the price to maximise gain from what has then become a scarce resource. In reality, the oil is still there in the ground and profit will be made when it is extracted but such is the way of economics. Also known as making hay whilst the sun shines!

Incidentally, when there is an oversupply or glut in the market, the price should fall but what tends to happen is that the oil producers cut back on production until the price rises so the consumer rarely wins.

Ray Dawson