Oil is not (quite) as important

Whilst petrol prices may be approaching stratospheric levels, they do not have the same pain on household incomes as they did through the oil shock era of the late 1970s. Back then, households were having to devote nearly 9% of their income to energy costs. Today, households will spend between 3% to 4% on energy costs and services. The burden is increasing for households due to rising oil costs but the impact is now more muted but still a detraction from growth.?

Russian oil production represents around 11 million barrels per day of oil production. If this production is halted, hampered or reduced this will impact the global balance. Swing production by Saudi Arabia would be important, and sanctions-hit Iran could be allowed to increase production. Together these actions would assist by maybe 4 million barrels a day, but a complete Russia shutdown would be severe to the oil price and more generally the world economy, but even worse on Russian hard currency generation. It is most likely that OPEC will serve the interests of OPEC members and that will see production tightly controlled.