Rising oil prices could be a major blow to demand.

On Sept. 28, the price of Brent crude broke through $80 a barrel, reaching a three-year high.

Wall Street has previously reported that with the gradual promotion of vaccines, oil demand is picking up.

As natural gas prices soar, demand for oil, which can be used as an alternative source of energy, has also strengthened further. With winter approaching and natural gas shortages in Europe, the outlook for oil demand looks bright.

But some experts warn that rising oil prices will lead to inflation, with the end result being a severe weakening of demand and stagnant economic growth.

An oil market in short supply

The demand for oil is rising, but the supply is difficult to keep pace.

Martinsen, a senior oil market analyst at DNB Markets, a Norwegian investment bank, said that due to the impact of Hurricane Ida last month, U.S. oil production in the Gulf of Mexico has lost more than 30 million barrels, which could reach more than 55 million barrels before full production resumes.

Morgan Stanley expects global oil supplies to become more tight, with an average of 3 million barrels a day from inventories last month, up from 1.9 million in the first few months of this year.

Goldman Sachs Group said in a report last week that the current decline in crude oil inventories was "the biggest on record" and that OPEC was unable to restore market balance.

"the level of inventory consumption is very high, which shows that the supply in the market is lower than generally expected." "Oil prices are out of touch with marginal supply costs and are moving towards a level that undermines demand," Morgan Stanley analysts Martijn Rats and Amy Sergeant said in a report.

Inflation weakens demand

Higher energy prices will also lead to higher inflation.

"the rise in oil prices has been one of the biggest drivers of inflation," Brennock, a senior analyst at London-based PVM Oil Union, said in a report on Tuesday. Worsening inflation will be a drag on a fragile economic recovery and oil consumption. This brings the focus to the issue of demand being undermined. "

Brennock pointed out that the price of $70 a barrel is already too high for the world's major buyers, while at $80 a barrel, oil prices will become a serious pain point and may even weaken import demand and dampen economic growth.