A jolt in the oil price has the entire planet in its grip. Prices have soared from US$65 per barrel to over $130 in just a few months, driving up fuel expenses, inflationary pressure, and consumer irrationality. Prices were rising quickly even before Russia invaded Ukraine as a result of booming demand and slowing supply growth.
Price jolts are nothing new. When viewed historically, they are not aberrations but rather a crucial component of the dynamics of the oil market. They have happened ever since the start of the business.
Oil price shocks can be caused by numerous sources. Since oil is a commodity that is traded globally, they involve significant changes in either supply or demand anywhere in the world. War and revolution, times of strong economic growth in major importing nations, and local issues in supplier countries, such as political unrest or a lack of investment in the oil industry, can all have an impact on shocks. The worst surges have generally incorporated two or more of these causes, which is the case right now.