The dilemmas of the oil economy – GulfToday

The dilemmas of the oil economy – GulfToday

Oil will remain a crucial factor in the global economy for a long time to come. While supplies of oil is crucial as can be seen from the economic sanctions against Russia in the wake of the Russian invasion of Ukraine, pushing up oil prices and with rising inflation in many economies consequently, there is also the other aspect of the demand for oil. If the global economy is subdued for various reasons because of the partial slowdown in China and impact on growth because of inflation, two of the big economies in the world, the demand for the oil would be less than expected. In a way, consumption of oil is a barometer of growth in the economy. That is why, oil experts, apart from the Organisation of the Petroleum Exporting Countries (OPEC) and the International Energy Association (IEA), are making their estimates of the demand for oil. There was cheer when consumption of oil which went down in 2020 because of the global disruption caused by Covid-19 pandemic rebounded in 2021. It is indeed the case that inflation is caused by rise in fuel prices, and it is feared that high oil prices will mean lowered demand in