Oil prices have eased with Brent crude back under $100 per barrel, but Javier Blas at Bloomberg says the decline may signal "demand destruction" from the Third Gulf War rather than true supply relief.
Demand destruction describes a sustained reduction in oil consumption as consumers, investors and governments shift away from fossil fuels or adopt rationing measures rather than absorb prolonged higher prices. Blas outlines defenses that have kept prices from spiking so far: selling commercial reserves, alternative shipping routes around the Strait of Hormuz and releases from strategic reserves.
Those defenses are finite, and Bloomberg notes reserves and rerouting may be reaching limits, meaning demand destruction could reshape energy markets and keep oil demand lower even after supply normalizes. If demand destruction takes hold, governments and consumers could enact lasting changes that depress oil demand and constrain prices long-term.
This report is based on information originally published by Jalopnik.
Read the full article at Jalopnik.
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