The MOU removed the war premium from oil while leaving the deficit premium untouched – the deal changes the size of the wave still to come, not whether it arrives
Interesting article. Thank you. You don’t spend a lot of time talking about demand destruction. In Australia, the latest monthly government figures for the sale of petrol indicates a 7% decline compared to the same month in 2025. Many people have reportedly bought EVs and many more will not have received the ones they’ve ordered yet so I would guess that 7% is just the start. With increases in oil supply (from Iran and elsewhere) this isn’t great news for either the Gulf States or for service station owners.
No, I say little on demand destruction because I see that as something occurring when the shock is primary price and demand, and thus equilibrium can be restored along suit and demand curves. When a large supply shock occurs you will naturally get demand destruction but it won’t restore equilibrium, except in a way that is not conducive to future growth – like ebola which stops the disease through organ destruction.
The idea of demand shifting away to alternatives are real, but they are medium to long term solutions, not short term.
Interesting article. Thank you. You don’t spend a lot of time talking about demand destruction. In Australia, the latest monthly government figures for the sale of petrol indicates a 7% decline compared to the same month in 2025. Many people have reportedly bought EVs and many more will not have received the ones they’ve ordered yet so I would guess that 7% is just the start. With increases in oil supply (from Iran and elsewhere) this isn’t great news for either the Gulf States or for service station owners.
Thanks for the comments.
No, I say little on demand destruction because I see that as something occurring when the shock is primary price and demand, and thus equilibrium can be restored along suit and demand curves. When a large supply shock occurs you will naturally get demand destruction but it won’t restore equilibrium, except in a way that is not conducive to future growth – like ebola which stops the disease through organ destruction.
The idea of demand shifting away to alternatives are real, but they are medium to long term solutions, not short term.