The imbalance between supply and demand in the international crude oil market has led to an increase in oil prices

Recently, with the continuous evolution of geopolitical situations and risks, international crude oil prices have continued to fluctuate, once rushing to a high of $120 / barrel, and now they have fallen, but they are still hovering
around $100 per barrel.
It is worth noting that the recent sharp fluctuations in international crude oil prices are closely related to the current geopolitical risks, but in essence, the key factor affecting international crude oil prices is still the game
between demand and supply.

Since the outbreak of the new crown pneumonia epidemic in 2020, whether it is a rapid rebound after oil prices fall to negative territory, or a sharp price fluctuation under the influence of extreme weather, behind its price trend is a change
in market expectations and judgments between crude oil demand and supply.

From the demand side, in 2021, with the development of new crown vaccination and the gradual recovery of the global economy, the market demand for international crude oil has been increasing
.
The severe cold weather in the northern hemisphere last winter further increased the market demand for crude oil, thus giving international crude oil prices a stronger upward momentum
.
However, with the widespread spread of the Omicron variant around the world at the end of last year, the market's concerns about the prospects of global economic recovery once led to a sharp decline in international crude oil prices
.

From the supply side, OPEC+, composed of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers, has always played a key role
in global crude oil supply.
In the energy shortage crisis that appeared last winter, in the face of rising oil prices, the US government once "shouted" OPEC+ to increase crude oil production, but OPEC+ has not been moved
.

At present, the market is still divided
on whether the risks posed by this geopolitical event are enough to continue to affect the trend of international crude oil prices.
However, it is worth noting that, in general, although geopolitical risk events are mostly temporary factors, once they have a more profound impact on the demand and supply of the international crude oil market, it may change the long-term trend of
international crude oil prices.
Zhao Yaoting, global market strategist at Invesco Asia Pacific (excluding Japan), said a few days ago that the current high oil prices are not too directly related to the current Russia-Ukraine conflict, because oil prices are more affected by supply and demand, and the current supply is problematic
.

From the current situation, the rise in international crude oil prices has reflected the imbalance between supply and demand in the crude oil market, and the market equilibrium has always been the focus
of attention of the International Energy Agency (IEA) and OPEC+ and other organizations.
Recently, international institutions, including the World Bank, the Organisation for Economic Co-operation and Development (OECD) and the International Monetary Fund (IMF), have warned
of the negative impact that current geopolitical risks could have on the global economy and trade recovery.
According to the World Bank, some countries that are highly dependent on Ukraine's wheat exports may face shortages of wheat supplies
.
The OECD believes that the current Russia-Ukraine conflict may reduce global economic growth by more than 1 percentage point this year and increase inflation by 2.
5 percentage points
.
The slowdown in the global economic and trade recovery may affect the global market demand outlook
for crude oil.

In addition to the risks encountered on the demand side, the supply side of the international crude oil market may encounter a new wave of shocks
.
In its latest March crude oil market report, the IEA pointed out that the prospect of large-scale disruptions in Russian oil production could trigger a global oil supply crisis
.
Starting in April, Russia could halt 3 million b/d of oil production
as sanctions come into effect and buyers shy away, according to IEA estimates.
For now, OPEC+ is sticking to a modest monthly supply increase
.
Only Saudi Arabia and the UAE have large spare capacity that could immediately help offset shortages
in Russian crude production.

Global refinery production estimates have been revised down by 860,000 b/d in 2022 since last month's report, as the 1.
1 million b/d reduction in Russian refinery output is not expected to be fully offset
by growth elsewhere, the IEA said.
In addition, if oil and commodity prices continue to surge, it will have a significant impact on
inflation and economic growth.
Oil demand is now expected to grow by an average of 2.
1 million b/d in 2022, about 1 million b/d
lower than the previous forecast.

Faced with the imbalance between supply and demand in the international crude oil market and rising oil prices, the IEA once chose to release oil strategic reserves, but achieved little
results.
At the same time, OPEC+ still adhered to the plan of slightly increasing production by 400,000 b/d in April, and did not take further measures to increase production to stabilize oil prices by increasing supply and promote the international crude oil market to achieve balance
.
In this case, in order to cope with the impact of the supply side on the crude oil market, the IEA decided to start from the demand side to solve the problem
.

The IEA said governments and consumers could act faster to cut short-term oil demand to ease the pressure
.
The current crisis has brought significant challenges to the energy market, but it has also provided opportunities
.
Indeed, today's combination of energy security and economic factors is likely to accelerate the weaning away from oil
.
Specifically, the IEA has proposed measures including working from home, making public transportation cheaper, and restricting air travel to address high oil prices and the imbalance between supply and demand in the market by reducing demand for oil, rather than just increasing oil production
.
According to the IEA's forecasts, advanced economies could reduce oil demand by 2.
7 million barrels per day over the next four months if they act now
.