OPEC’s Rerun of ‘That 70s Show’ Is Losing Its Edge
Markets digested the supply shock easily enough. The bigger question is demand and whether growth replaces inflation as the chief economic worry.
What a real oil shock looks like: Lining up for gas in Boston in 1973.
Photographer: Spencer Grant/Getty
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Sunday brought a classic retro oil shock. The OPEC+ cartel, which combines the traditional Organization of Petroleum Exporting Countries with Russia and a few others, announced that it was cutting production at the end of this month. It was just the kind of ugly supply shock that created mayhem in the global economy in the 1970s, and again as recently as last year after the invasion of Ukraine. The immediate reaction was that this would pitchfork the world back into an inflationary morass. When Brent crude jumped 8% at Monday’s Asian opening, that seemed to be confirmed. Just as the entire macro narrative changed overnight three weeks ago with the collapse of Silicon Valley Bank, so it seemed that this was a shock that would shift the debate back toward inflation and higher rates.