Amid the ongoing debate about decarbonization, electric vehicles, and climate goals, the reality of oil remains an uncomfortable truth: the world consumes more than 100 million barrels per day, and far from decreasing, global demand tends to grow, especially driven by Asia. This was one of the most forceful messages from a webinar hosted in April 2023 by the Council on Foreign Relations (CFR) with academic Carolyn Kissane (NYU), focusing on how the Ukraine war, OPEC+ policies, and the energy transition are reshuffling the board.
The number is striking for a very simple reason: every day, those over 100 million barrels must not only be produced but also transported, refined, and distributed. This is where geopolitics becomes infrastructure: maritime routes, pipelines, insurance, sanctions, bilateral agreements, and cartel decisions. Oil is not just a commodity; it’s a planetary logistical system that, if stressed, directly impacts inflation, growth, and social stability.
OPEC+: cuts, prices, and a reminder of dependence
One key point was the impact of the reduction announced by OPEC+, a coalition that is no longer the “classic” OPEC because it includes external producers like Russia. At that moment, the decision to cut production served as a reminder to consumers and governments: in tight markets, a relatively small cut can move the price and reignite fears of energy-led inflation.
This effect is magnified when economies enter slowdown phases or flirt with recession: higher energy prices mean pressure on companies, increased logistical costs, and less disposable income for families. It creates the perfect storm for governments trying to sustain growth without significantly widening deficits.
Russia continues to sell: less to Europe, more to Asia
Another important insight is that sanctions and embargoes have not “dried up” Russian oil. Instead, they have reshaped the buyer map. Some of the crude that previously flowed to Europe now finds outlets in markets like China and India, often at discounts.
This doesn’t eliminate the problem; it transforms it. New routes emerge, with more intermediaries and, at times, mechanisms to bypass restrictions (for example, in maritime transport, insurance, or triangulation). Economically, the result is a more complex supply chain that is consequently more vulnerable to shocks.
Three producers dominate, but demand drives the market
An important point highlighted in the analysis is that the major producers and major consumers are not always the same entities.
- Leading producers: the United States, Saudi Arabia, and Russia remain the key players.
- Major consumers: the United States, China, and India.
Furthermore, China has increasingly become a key importer. If its demand surges during economic reopening, tourism, and industrial activity, the market quickly reacts. In oil markets, elasticity is low: increasing production takes time; cutting it happens in a meeting.
Oil is not just gasoline: petrochemicals and fertilizers
A commonly overlooked fact in public debate is that oil is not only consumed in cars, airplanes, or trucks. It is also the raw material for petrochemicals, plastics, industrial products, and essential components for sectors like agriculture (for example, through inputs and supply chains related to fertilizers). This explains why, even during COVID-19 lockdowns, demand fell significantly but not to a “catastrophic” extent in historical terms. The system slows down but does not shut off.
Energy transition: progress but not fast enough
The webinar raised a key tension: energy transition is advancing—with renewables, electrification, and efficiency—but global oil demand does not fall as quickly as many planners would like. An important nuance is that much of future demand growth is concentrated in regions that still need more energy, not less.
In Africa, for example, the challenge is twofold: expand energy access and do so sustainably. But there is an evident political-economic clash when parts of international financing avoid fossil fuel projects while those countries are still building basic infrastructure. This sparks debates about equity, development, and energy sovereignty.
The US–Saudi Arabia relationship has changed
The historic “oil for security” arrangement established after World War II has eroded. With higher US production and a more multipolar geopolitical landscape, Saudi Arabia acts with greater autonomy, which is reflected in decisions coordinated with OPEC+. In the broader financial context, this evolution is crucial: when leading energy actors no longer align automatically, markets incorporate an uncertainty premium.
And nuclear? Zero emissions, but at very different paces
In the decarbonization debate, nuclear energy appears as an unavoidable actor in many zero-emissions scenarios but with national realities varying greatly: some countries reinforce nuclear, others oppose it due to social resistance, costs, or political risks. The implicit conclusion is that the transition will not be uniform, complicating both industrial planning and energy price stability.
Frequently Asked Questions
Why does it matter that the world consumes more than 100 million barrels per day?
Because it means oil remains the “circulatory system” of the global economy: production, transportation, industry, and consumption depend on a massive daily flow. Any disruption quickly translates into higher prices and inflation.
What changes when Russia exports more oil to Asia instead of Europe?
It alters the logistical and financial map: new routes, intermediaries, and dependencies surface. Crude still circulates, but with increased complexity—and that can raise the risk of shocks or bottlenecks.
Will the energy transition lead to stable reductions in oil prices?
Not necessarily. If global demand doesn’t decline enough and supply adjusts due to political decisions or underinvestment, prices can remain volatile. While the transition cuts some consumption, oil still has industrial uses that are hard to replace in the short term.
Why does OPEC+ have such a significant impact on markets?
Because it coordinates supply decisions in a market where reactions take time. In high-demand environments with limited capacity, even a small cut can influence prices and affect inflation, interest rates, and economic growth.