Global oil supply growth is lagging demand

Sources: Bloomberg, Energy Information Administration, and Wells Fargo Investment Institute. Brent crude oil: monthly data from January 1, 2002 to September 30, 2021. Global demand/supply growth: monthly data from January 1, 2002 to August 31, 2021. YoY = year-over-year.

Key Takeaways

  • The rate of change of demand growth versus supply growth has had a strong influence on oil prices.
  • Global oil producers have been hesitant to bring extra production back so far in 2021. Combined with persistently growing demand, we suspect oil prices could spend much of the next two years above $70 per barrel.