Oil’s Supply-Demand Shock

By Erik Norland, Senior Economist, CME Group

The decline in oil prices is reminiscent of episodes in 1985-86 and 2014-16 when supply increased, with an additional element of falling demand.

  • Oil prices tumbled in 1985-86 and again in 2014-2016.
  • Abrupt increase in oil output precipitated the declines.
  • Current selloff triggered by both supply and demand shocks.
  • Global oil demand has fallen due to spread of coronavirus.

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