Why Oil Is Still Below $100: The 5 Forces Reshaping the Global Energy Market
Why Oil Is Still Below $100: The 5 Forces Reshaping the Global Energy Market
Peyman Molavi Economist
Despite geopolitical tensions, supply disruptions, and repeated predictions of a major oil price spike, crude oil has remained below the psychologically important $100-per-barrel threshold. Many investors expected a return to the energy shocks of the 1970s or even the post-pandemic surge of 2022. Instead, the market has demonstrated remarkable resilience.
Here are the 5 most important reasons why:
1. China, China, and China
For two decades, China was the world’s primary engine of oil demand growth. Today, however, its economy is growing more slowly, its property sector remains under pressure, and electric vehicle adoption is accelerating rapidly.
A weaker-than-expected Chinese recovery has removed one of the biggest sources of incremental demand that historically pushed oil prices higher.
2. Demand Destruction
High energy prices eventually reduce consumption. Consumers drive less, businesses improve efficiency, and industries seek substitutes.
The global economy has become more energy-efficient over time, making demand less sensitive to economic growth than it was in previous decades.
3. Oil Is Finding Alternative Routes
The Strait of Hormuz remains one of the world’s most critical energy chokepoints, but a growing share of oil exports can now bypass it through pipelines and alternative export infrastructure.
Markets understand that while disruptions would matter, the world’s energy system is not as vulnerable as it once was.
4. The Original Oversupply Problem Never Fully Disappeared
Even before recent geopolitical events, global oil markets faced concerns about excess production capacity.
OPEC+ production management has helped stabilize prices, but underlying supply remains substantial enough to prevent a sustained move above $100.
5. Strategic Petroleum Reserve Releases and Commercial Inventories
Governments learned important lessons from previous energy crises.
Strategic petroleum reserves and commercial stockpiles act as buffers, helping absorb temporary supply shocks and reducing panic-driven price spikes.
