Oil spent three years drifting lower — from $89 in September 2023 to $58 in December 2025 — as the world debated whether the petroleum age was ending. Electric vehicles were surging. OPEC+ was struggling to hold the floor. Peak oil demand, not peak oil supply, was the new thesis. Then March 2026 happened, and oil spiked from $67 to $116 in ten days. Eighty years of history has one consistent lesson: complacency about oil never lasts.
After the Ukraine war pushed oil to $115 in the summer of 2022, most analysts expected elevated prices to persist. Russia was under sanctions. OPEC+ was cutting production. The SPR had been drawn down to its lowest level since the 1980s. The conditions for sustained $80-100 oil seemed firmly in place.
Instead, oil drifted steadily lower. From an average of $78 in January 2023, it fell to $58 in December 2025 — a decline of 26% over three years. The causes were multiple and reinforcing. Chinese demand, which had been the engine of every oil bull market since 2004, was plateauing as the country’s economy shifted from infrastructure investment to services. Electric vehicle sales were growing at 30-40% annually, displacing an estimated 1.5 million barrels per day of gasoline demand by 2025. US shale production had reached its plateau, but non-OPEC supply from Guyana, Brazil, and Canada kept growing.
OPEC+ responded with deeper and deeper production cuts — over 5 million barrels per day by late 2024. But each cut sacrificed market share to non-OPEC producers who pumped freely. The cartel was caught in the same trap that had ensnared it in 1985: cutting to defend prices while competitors free-rode. The question was no longer whether OPEC+ could hold the floor, but how much floor was left to hold.
The chart shows a market that was quietly losing the conviction of the 2022 bull run. Each rally attempt in 2023 — to $89 in September on Saudi voluntary cuts, to $85 in October on the Israel-Hamas conflict — was followed by a lower low. By 2024, the pattern was set: OPEC+ would cut, prices would stabilize briefly, then non-OPEC supply growth and softening demand would push them lower again.
The 2025 decline accelerated through the second half, as oil fell from $68 in July to $58 in December. The market was pricing in a future of weakening demand, abundant supply, and an energy transition that, while slow, was clearly underway. Global EV sales surpassed 20 million units. Solar and wind became the cheapest source of new electricity generation in most of the world. For the first time, the International Energy Agency’s baseline scenario projected peak oil demand before 2030.
Then March 2026 shattered the complacency. Oil, which had been trading near $67 at the end of February, surged to $115.58 on March 8 — a 72% spike in less than two weeks. The move was a reminder of the lesson that has defined eighty years of oil history: when spare capacity is thin and markets are complacent, supply disruptions create price spikes of a magnitude that no one expected, every single time.
The bears see the end of oil. Global oil demand is approximately 103 million barrels per day, barely above its pre-pandemic level of 101 million. Electric vehicles are displacing gasoline at an accelerating rate. Solar-plus-battery systems are cheaper than natural gas power plants. Hydrogen, synthetic fuels, and direct electrification are eroding oil’s monopoly in transportation sector by sector. The IEA projects peak demand by 2028-2030. China, the last great demand growth engine, has already peaked in per-capita terms.
The bulls see a supply crisis. Capital expenditure on new oil supply has been running 40% below the levels needed to maintain current production, according to the IEA’s own data. The shale revolution has matured — the Permian Basin’s core acreage is being drilled out, and productivity gains have plateaued. Existing fields decline at 5-8% per year naturally, meaning the industry must find 5-8 million barrels per day of new production annually just to stand still. If demand does not peak, a supply crunch is inevitable.
The realists see both. The energy transition is real but slow. Oil demand may peak before 2030, but the decline will be measured in hundreds of thousands of barrels per day per year, not millions. Meanwhile, underinvestment in conventional supply creates vulnerability to the kind of spikes that have defined every decade since the 1970s. The world is in a transition period where both narratives are partially true — demand is softening and supply is getting harder to find. The result is a market that drifts lower in quiet times and explodes in crises.
| Year | Avg Oil | YoY | Low | High | Key Theme |
|---|---|---|---|---|---|
| 2023 | $78 | −18% | $70 | $89 | Post-Ukraine normalization |
| 2024 | $77 | −1% | $70 | $85 | OPEC+ struggles, China slows |
| 2025 | $65 | −15% | $58 | $76 | EV growth, demand plateau |
| 2026 YTD | $71* | — | $56 | $116 | March spike: $67 → $116 |
* Through March 16, 2026
The 2026 row tells the whole story of the current era. An average of $71 disguises a $60 range — from $56 in January to $116 in March. That $60 spread in a single quarter is the widest since the pandemic’s negative-to-$58 range in 2020. Oil was supposed to be entering a quiet twilight. Instead, it produced a 72% spike in ten trading days.
The three-year decline from 2023 to 2025 was real — driven by genuine structural shifts in demand. But the March spike was also real — driven by the fundamental vulnerability of a market with thin spare capacity, underinvestment in new supply, and a geopolitical landscape that can disrupt millions of barrels per day overnight. Both things are true simultaneously, and they will remain true for as long as the world runs on 100 million barrels of oil per day.
The full history chart reveals the five eras of oil. The Calm (1946-1972): twenty-seven years of administered pricing, the flattest commodity chart in economic history. The Shocks (1973-1985): OPEC’s discovery of pricing power and the two oil crises that reshaped the global economy. The Quiet Decades (1986-2002): the collapse of OPEC pricing power, cheap oil, and the Great Disinflation. The Supercycle (2003-2014): China’s demand surge and the return of $100 oil. And the New Era (2015-present): shale, pandemics, wars, and the energy transition.
Across all five eras, one pattern persists: long periods of relative stability punctuated by explosive moves in both directions. Oil does not trend smoothly. It builds pressure during quiet periods, then releases it in violent bursts. The calm of the 1960s produced the explosion of the 1970s. The quiet of the 1990s produced the supercycle of the 2000s. The drift of 2023-2025 produced the spike of March 2026. The commodity that built the modern world remains the most volatile and consequential price in the global economy.
Oil has gone from $1.17 to $147 to negative $37 to $116. It has been administered by Texas regulators, weaponized by Arab governments, crashed by Saudi market-share wars, inflated by Chinese industrialization, shattered by pandemics, and disrupted by European land wars. Through all of it, one truth has remained constant: the world runs on oil, and the price of oil is determined by the margin between supply and demand — a margin that is always thinner than anyone thinks.
The energy transition will eventually reduce that dependence. Electric vehicles, renewable energy, and efficiency gains are slowly bending the demand curve. But “eventually” is measured in decades, not years. For as long as the world consumes 100 million barrels per day, oil will remain the most consequential price in the global economy — and the most volatile. The shocks will keep coming. The only question is when, and from where.
Eight episodes. Eighty years. From the twenty-seven-year calm to the pandemic’s impossible price. The story of oil is the story of the modern world — of the energy that built it, the conflicts it created, and the transition that may, someday, move beyond it. But not yet.