Oil Producers Aren’t Crazy to Worry About High Prices – The Wall Street Journal

March 22, 2022 by No Comments

For oil producers, the flip side of today’s high prices and profits is concerns about “demand destruction” as buyers find ways to cut their needs. They’re right to worry: The hit this time could go faster and further than the one that followed the 1970s shocks.

Historically, when oil costs have exceeded 4% of gross domestic product globally, users have looked for substitutes. We are near that number now: At $100 a barrel, 2022 oil expenditure would be about 4.3% of 2020 global GDP. The International Energy Agency sees lower consumption ahead. Last week it cut its oil demand forecast by 1.3 million barrels a day—about 1% of the 2021 average—for the rest of the year.

Source: https://www.wsj.com/articles/oil-producers-arent-crazy-to-worry-about-high-prices-11647865322


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