Oil Shock

An oil shock occurs when there is a sudden and significant increase or decrease in oil prices, often caused by geopolitical events, supply disruptions, or changes in global demand. These shocks can lead to economic instability, as higher oil prices raise costs for transportation and manufacturing, potentially causing inflation and slowing economic growth. Conversely, a sharp drop in oil prices can reduce income for oil-producing countries and impact related sectors. Overall, oil shocks disrupt the balance of energy markets and can have broad ripple effects on economies worldwide.