RISE AND FALL

Paul Wiseman finds that Russia, COVID, inflation, and the strong US dollar are all driving the oil situation in North America. Early in the northern hemisphere summer of 2022, prices for West Texas Intermediate (the US benchmark) as well as Brent Crude (the European benchmark) dropped from previous highs due to concerns about China’s zero COVID policy and demand destruction in the US due to historically high pump prices. In July, US President Joe Biden met with Saudi Arabia’s Crown Prince Mohammed bin Salman. The stated reason was for a ‘reset’ and to ask one of the world’s biggest exporters to turn up the tap to lower oil prices in the lead-up to midterm elections slated for November 2022, but no such promises were forthcoming. Prices for crude oil and at the pump had hit those highs because of sanctions against another top exporter, Russia, after its invasion of Ukraine. This removed a significant amount of oil from the world market just as fuel demand was recovering from previous COVID travel restrictions. The combination of rising demand and falling output squeezed consumers in North America as it did the rest of the world. ‘What we’ve seen,’ says Matt...