A good article, overall...but there are a couple items worth raising...
First...
The 10-15% reduction in Russian oil demand isn't really the same as a 10-15% reduction in the oil price. The latter would motivate other oil producers to reduce their supply. The former may not lead to increased oil supply from the other players - but would certainly not reduce it. OPEC+ has held the line on increasing their output (their repeated failures to meat monthly prod. quotas is telling) - but will that discipline really hold in the long-term? Especially in the wake of demand destruction? (see next)
Second...
When oil prices really surged in 2007-2008 - demand proved quite inelastic. We are already seeing early signs of demand destruction in the USA and a couple of Asian economies. Obviously, we are seeing *significant* demand destruction out of China at the moment due to the lockdowns. On the one hand, China has always been equal to the task of containing COVID outbreaks during the past two years. But ever-more-infectious variants have made outbreaks and lockdowns more frequent - and it isn't exactly evident how they extricate themselves from that loop here. Perhaps the real implication here is a question of whether the reduced demand is contained on the consumer side - or if it necessitates reduced industrial output. We'll see.
A good article, overall...but there are a couple items worth raising...
First...
The 10-15% reduction in Russian oil demand isn't really the same as a 10-15% reduction in the oil price. The latter would motivate other oil producers to reduce their supply. The former may not lead to increased oil supply from the other players - but would certainly not reduce it. OPEC+ has held the line on increasing their output (their repeated failures to meat monthly prod. quotas is telling) - but will that discipline really hold in the long-term? Especially in the wake of demand destruction? (see next)
Second...
When oil prices really surged in 2007-2008 - demand proved quite inelastic. We are already seeing early signs of demand destruction in the USA and a couple of Asian economies. Obviously, we are seeing *significant* demand destruction out of China at the moment due to the lockdowns. On the one hand, China has always been equal to the task of containing COVID outbreaks during the past two years. But ever-more-infectious variants have made outbreaks and lockdowns more frequent - and it isn't exactly evident how they extricate themselves from that loop here. Perhaps the real implication here is a question of whether the reduced demand is contained on the consumer side - or if it necessitates reduced industrial output. We'll see.