Jul 22, 2022 - Economy & Business

Oil is back under $100 a barrel

Illustration of an oil barrel with a red discount tag.
Illustration: Aïda Amer/Axios

Oil prices have slipped below the $100 a barrel mark, amid a roughly 20% sell-0ff since early June.

Why it matters: Falling prices could disrupt the doom loop of rising inflation, rising interest rates, and rising expectations of further Fed hikes that have crushed the stock market this year.

Driving the news: Worries about weakening demand, which sent crude oil prices down 3.5% to $96.35 Thursday.

The intrigue: Simultaneously, investment in crude production is picking up steam, says James West, head of oilfield service research at Evercore ISI.

  • "We are starting to see some urgency and some acceleration in activity," he says.
  • Mideast state-owned oil giants, international oil majors such as Exxon and independent Texas drillers unbeholden to Wall Street shareholders are all starting to pump more or ramp investment in order to do so, he says.

The impact: The combination of slipping demand and potentially increasing supply would support lower oil prices, though perhaps not drastically lower.

  • "Nobody wants $100 oil," says West. "I think $80 is probably something people on both sides, producers and consumers, are very comfortable with."

The bottom line: Add investors to the list of those who'd love to bid adieu to the energy price spike, and to the overall inflation and Fed rate hikes that helped produce.

  • With crude oil down 9% this month, stocks are enjoying their best month of the year — the S&P 500 is up over 5%.

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