Oil prices are rising, driven by strong global growth and the reemergence of a Mideast risk premium. The market dynamics of this round of oil price increases, however, are strikingly different from recent episodes, such as in 2008 or 2012-2013. There are two key differences this time around that deserve our focus: (1) shale oil supply may respond more rapidly to price incentives than older technologies, and (2) the US is now an oil exporter (as well as importer). As we explore these two topics, we will see some special nuances and caveats, too.
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