For that, investors can mostly thank Russia as well as the ongoing economic recovery from the pandemic. The invasion of Ukraine prompted the US, Europe, and others to spurn Russian oil imports, even as OPEC countries led by Saudi Arabia stuck closely to relatively low drilling quotas. So supply was tight as rates of driving and flying rose in many parts of the world (not including China, where lockdowns during much of the year kept oil demand there relatively low).


Those forces together were enough to push per-barrel oil prices to their highest levels since the mid-2010s—and generate record profits for producers. Many oil companies then used their recent windfall profits to buy back shares, which drives up their value.

Will the oil market remain bullish in 2023?

The outlook for next year is still fairly rosy, if not quite as rosy as 2022.

Analysts at Goldman Sachs and Morgan Stanley have predicted another spike in oil prices as lockdowns in China ease and the US makes purchases to refill its Strategic Petroleum Reserve. But Citi’s global commodities chief thinks prices will be lower than they are now as the US increases its exports.


Peak oil demand remains within sight

Between the pandemic and the war in Ukraine, balancing supply and demand in the global oil market has become an even more precarious, delicate maneuver with high stakes for oil companies’ bottom lines.


Any investors taking a longer-term view should proceed with caution. After a century of booms and busts, the oil market’s endgame is visible on the horizon. A report in October from the International Energy Agency predicts peak oil demand to arrive within a decade, and a growing number of major banks are closing their purse strings to new oil drilling.

When that happens, these stocks won’t look so hot.

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