Price volatility: Oil is a volatile commodity, and its price can fluctuate significantly due to a variety of factors, including supply and demand, geopolitical events, and economic conditions. This means that oil investments can be risky, and investors could lose money.
Economic risk: Oil is a cyclical commodity, and its price tends to rise and fall with the overall economy. If the economy weakens, oil demand could decline, which could lead to lower oil prices.
Geopolitical risk: Oil is produced in many different parts of the world, and geopolitical events in these regions can have a significant impact on oil prices. For example, a war or political instability in a major oil-producing country could lead to supply disruptions and higher oil prices.
Environmental risk: Oil is a fossil fuel, and its production and consumption have a negative impact on the environment. This is leading to increasing government regulation of the oil industry, which could hurt oil company profits.