High crude oil price will destroy demand

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Will it surpass historical level of $146?

WILL the demand for oil reach its limit at some point and crash? Any figure on the price of oil would just be a pure guess, and will pass the level of reasoning. It wouldn’t include only oil but also the price of gas, which is ten times higher than what it was last year. No one ever thought of such levels for all types of commodities without exception, as oil is not there.

Neither OPEC nor its Plus partners will be able to meet our desperate need for new barrels. Undoubtedly, oil should top the list of the factors that are affecting all of us in every field including transportation, heating, electricity, and cooking. Gas is also playing a crucial role in the lives of Europe, which is 40 percent dependent on direct supply of Russian gas through pipelines, and 70 percent dependent on Russian oil supply.

All this will gradually disappear in the wait for alternative supply. It has prompted some European countries to search for energy in all forms. For weeks we have been saying that the oil capacity is at its limit, and OPEC+ can no longer meet its quota obligation. This has been the case for more than four months. Oil was short by 800,000 to one million barrels last month. Some of the shortage came from the largest oil producers including Russia, Iraq, and the usual Nigeria and Angola. In the meantime, the world is facing a loss of about 5.5 million barrels of Russian crude oil or Ural crude that are mostly consumed in European refineries, and are usually sent through pipelines like gas. Now no one wants to touch Russian oil because for various reasons, starting with international oil companies, and trading companies. They do not want to be labeled as given hands, even though no sanctions have been imposed on Russian oil and gas. However, getting their cash back or making payments could be a hazardous mission. The oil supply is tight, and availability is limited, as oil price is heading to an unknown level of $115 a barrel and may not stop soon unless demand crushes and extends beyond buying.

By Kamel Al-Harami
Independent Oil Analyst

email: [email protected]

This news has been read 16591 times!