The past week’s sudden surge in oil prices brought to mind the nightmare of shortages, but it’s not too likely motorists will be queueing to fill up around the world, analysts say.
Given the slowdown in the global economy and the abundance of crude produced worldwide, the prospect of a $100 barrel, for now, doesn’t look too likely. On top of that, “central banks would not react to a supply shock with massive interest rate hikes to combat rising inflation,” they said.Consumption in the United States, for example, rose from 17.3 million barrels per day in 1973 to 20.5 mbd in 2018, an increase of only 18 percent even as the country’s real gross domestic product jumped 230 percent.
On top of that, oil production has branched far beyond the Middle East, said Tchilinguirian, referring to North Sea oil exploited since the 1980s, deep-sea exploitation off the coast of West Africa and Brazil, and the oil sands of Canada. As such, a country like Saudi Arabia would probably no longer decide to voluntarily suspend its exports “because it could lose its status as a reliable supplier,” says Alan Gelder, refined products specialist for Wood Mackenzie.
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