Assessing the Demand Destruction That Will Be Needed to Balance the Oil Market

Bridgewater

Elena Gonzalez Malloy, Andrew Foote

Article

1 Pages

c With producers unable to quickly fill the gap, the paper argues that substantially higher prices may be necessary to curb consumption.

Key Takeaways

Demand Destruction Threshold: Historical relationships suggest balancing the oil market could require spot prices above $200 per barrel as consumers reduce consumption.
Supply Deficit Widens: Russian disruptions could push the global oil deficit from roughly 2% before the invasion to between 3.5% and 5% of demand.
Russian Capacity Risk: Bridgewater estimates roughly 1.5 million barrels per day of Russian production could be at risk through 2024 as sanctions constrain technology and capital.
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