One of the crucial questions in the oil market is whether supply or demand holds more significance in explaining oil price movements. The first idea underlying our study emphasizes the need to incorporate a temporal dimension into this question. We distinguish between supply and demand shocks and considering transitory and permanent forces we analyse effects over time. This involves long-term restrictions for transitory shocks and short-term restrictions related to low supply elasticity in the oil market to identify the structural model within a system sharing a common trend. Our dataset covers the period from 1990 to 2023 and thei main conclusion is that short-term fluctuations in oil prices are primarily driven by demand around 80\% in the first months, while supply-side factors exert more influence in the medium to long-term achieving 70\% in 2 years while business cycle vanishes. Additionally, we have strong evidence of the distinct roles played by OPEC and non-OPEC members in both the equilibrium and market dynamics.
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