This paper documents the determinants of real oil price in the global market based on
SVAR model embedding transitory and permanent shocks on oil demand and supply as
well as speculative disturbances. We find evidence of significant differences in the
propagation mechanisms of transitory versus permanent shocks, pointing to the
importance of disentangling their distinct effects. Permanent supply disruptions turn out to
be a bigger factor in historical oil price movements during the most recent decades, while
speculative shocks became less influential.