A global surplus of oil has led to a significant decline in energy prices, with benchmark US crude plummeting over 7% on Monday, its largest single-day sell-off this year. The Middle East conflict between Iran and the US has raised concerns about potential disruptions to oil supplies, but experts say that the world is now awash in oil.
The US is producing record volumes of natural gas and crude, with energy companies shutting down drilling operations due to low prices. Despite this, the odds of a US oil company restarting drilling are slim. Meanwhile, producers outside the US are boosting production, which could help stabilize global oil supplies.
However, there’s growing evidence that weakening global demand for oil is playing a significant role in driving prices lower. The International Energy Agency (IEA) reports that oil’s share of global energy demand has fallen below 30% for the first time ever. Global sales of electric cars have surged, with one in five vehicles sold last year being electric. Additionally, fossil fuel-powered engines are becoming increasingly efficient.
As a result, prices at the pump are likely to continue falling, with experts predicting that national average gas prices will cease to increase and may even start to fall as early as this weekend. With the US producing record volumes of natural gas and crude, it’s unlikely that oil prices will rise anytime soon.
Source: https://apnews.com/article/oil-supply-demand-middle-east-1d4c15bf394235396e755c74bef4b458