key definitions
- supply shock
- lost barrels from conflict or OPEC+ policy.
- demand shock
- recession or China slowdown weight.
- breakeven
- how inflation swaps embed energy pass-through.
headline CPI follows oil with lags; core strips energy but not second-round effects in some regimes.
real consumer spending is rate-sensitive when gasoline spikes.
1990s weak prices
OPEC coordination faltered; Asian crisis hit demand.
- supplycapacity returned.
- demandsoft patches.
cheap oil helps consumers unless it signals demand implosion.
WTI averaged weak-to-mid teens late decade.
EIA
2000 to 2008 supercycle
China industrialization met underinvestment.
- demandEM heavy.
- fxdollar sometimes inverse.
energy capex supercycles create boom-bust for services firms tied to patch.
WTI climbed into triple digits by 2008.
EIA
2009 to 2020 shale + swings
US supply growth, OPEC price war, COVID demand cliff.
- shaleproductivity boom.
- covid2020 cliff.
high-low oil both stress high-yield energy credit.
WTI crashed in 2020 briefly on annual average terms.
EIA; Fed
2021 to 2026 inflation + geopolitics
reopening demand, Ukraine shock, Middle East risk premia.
- geopoliticsrisk premia.
- policySPR releases then refills.
oil can accelerate inflation headlines even when core is stickier from shelter.
WTI elevated versus 2010s average.
EIA
replace with EIA annual averages when updating.
WTI vs Brent vs Midland basis matters for US corporates.