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