In his excellent Substack, The Overshoot, Matthew Klein, formerly at the FT, argues that oil prices are surprisingly low. This is true in both nominal and long-run real terms. Just like the IEA, markets assume that things will soon return to normal. Yet it is not at all obvious why this will be the case. In particular, as Klein stresses, “the current threat to supply is unprecedented”. Moreover, he adds, previous “changes in prices required to reduce demand and/or increase supply were far larger than what we have seen so far, and the adjustment periods also took longer, even though the changes in volumes were also far smaller than what is currently happening”.