The Rise of International Oil Prices: The Logic and Impact Behind It

This seemingly simple numerical change actually contains complex economic, political, and market factors, and has profound impacts on the global economy and related industries.

From the perspective of supply and demand, the gradual recovery of the global economy is an important driving force for the rise in oil prices. As major economies such as the United States and the European Union gradually emerge from the impact of the pandemic, activities in the transportation and industrial sectors are becoming increasingly frequent, leading to a significant increase in demand for oil. The International Energy Agency (IEA) stated in its report that global oil demand is expected to gradually recover to pre pandemic levels by 2025, and may even surpass them. At the same time, OPEC+'s decision to cut production has tightened market supply. In order to stabilize oil prices, OPEC+reached a production reduction agreement, reducing the market release of crude oil. In the situation where demand increases and supply decreases, oil prices are naturally pushed up.

Geopolitical factors have also played a key role in the rise of oil prices. As an important global oil producing region, the escalating tensions in the Middle East have raised concerns in the market about crude oil supply. The risk of sanctions triggered by the Iranian nuclear issue poses uncertainty for Iran's crude oil exports; Although the situation between Russia and Ukraine has not directly cut off oil supply, the long-term instability has raised concerns among investors about future oil supply. This concern has prompted investors to flock to the crude oil market, and the injection of large amounts of funds has further driven up oil prices.

The rise in oil prices has had a wide-ranging and profound impact on the global economy. For the logistics industry, transportation costs have significantly increased, and the increase in freight rates has led to higher transportation costs for goods. Ultimately, these costs are passed on to consumers, driving up prices and exacerbating inflationary pressures. The aviation industry is also deeply affected, as the increase in fuel costs may lead to higher ticket prices, higher travel costs for people, and thus inhibit the development of related industries such as tourism, hindering the pace of economic recovery.

For countries that rely on oil imports, an increase in import costs can lead to a widening trade deficit and an imbalance in international payments. In order to balance their payments, some countries may adopt tight monetary policies to suppress domestic economic growth. Although oil exporting countries may increase their foreign exchange earnings in the short term due to rising oil prices, in the long run, high oil prices may accelerate the global energy structure adjustment, prompting countries to accelerate the search for alternative energy sources, reduce their dependence on oil, and pose hidden dangers to their future sustainable economic development.

From a technical perspective, although oil prices have recently rebounded, they are still in a state of high volatility. The recovery of shale oil production in the United States is an important factor affecting the trend of oil prices. On the one hand, increasing shale oil production may alleviate the pressure of rising oil prices; On the other hand, technical and cost issues may lead to slower than expected production increases, which will continue to support the rise in oil prices in the short term. If oil prices continue to rise, investment enthusiasm in the shale oil sector will be stimulated, which will change the future supply and demand rhythm, making the trend of oil prices even more unpredictable.

The recent rise in international oil prices is the result of multiple factors such as supply and demand, geopolitics, etc. Its impact on the global economy and various industries is extensive and complex. In the future, the trend of oil prices will still be influenced by these factors, as well as the global economic recovery process, energy policy adjustments, and other factors, which deserve continuous attention from all parties.