Supply shocks dominated global commodity markets in 2022, and we saw the dark side of globalisation.
The oil market, already prone to volatility, left energy analysts stumped on what would happen next. Oil geopolitics have never been tenser, and the battle lines were drawn in 2022.
Russia’s invasion of Ukraine was the most significant catalyst, making oil supplies tighter in Q1 2022 and causing the highest oil prices in a decade.
The effects ricocheted across the globe and led to more volatility in both demand and supply.
On the demand side, European countries were forced to wean themselves off Russian oil and gas, causing more friction in global demand. For instance, Europe was so desperate that representatives from the EU Commission’s energy department visited Nigeria on a gas-supply-finding mission. Pictures were taken, and hands were shaken, but Nigeria was too busy fighting theft and vandalism demons in 2022 to ramp up gas supplies. China and India, two countries with the largest oil demand in the world, seized the opportunity to buy Russia’s controversial oil at discounted prices. However, China was stuck in lockdown in 2022, meaning there’s a real chance demand could rise in 2023.
But, the real drama happened on the supply side.