Despite falling back to around $120 per barrel on Monday, the price of oil is still high. European countries are trying to find ways to buy Russian oil.
The lack of oil exploration over the last decade has been caused by the disruption in the Russian oil supply to the global market. High oil prices are not a short-term phenomenon, they are the product of nearly a decade of under investment by the oil industry, and there is no flood of money coming anytime soon.
Russia is the third-largest oil producer in the world, supplying over 10 million barrels per day, or 10% of the world's supply in 2020.
Russian banks have been cut off from the rest of the world, and it is not clear how oil will make its way from Russia to Europe. Even if Russia isn't completely cut off, a small disruption of the world's oil supply is a very big deal and can't be filled quickly.
The United States of America, the biggest oil producer in the world, has been reducing its oil production because of the low oil prices. When oil peaked at over $100 per barrel, drilling peaked, but has been falling ever since.
There is a lag between when a well is drilled and when it starts producing oil, so there is also a lag between the peak in drilling and the peak in production.
It is possible that US oil producers will increase drilling in the coming months, but it will take a long time before production rises in a significant way. Over the last few years, we've seen a wave of bankruptcies from oil drillers when oil prices plummet.
There aren't many oil companies that want to start drilling today. Money given to drillers is not given out by banks or institutional investors because they don't want to take the risk or because they have other environmental priorities.
The US, Brazil, Mexico, and countries on the western coast of Africa all had big oil drilling plans through the end of the year, only to have them fail because of low oil prices.
If we know that Russian oil will be off the world market for a long time, we can change the equation, but that is not a guarantee at the moment. When oil traded for negative prices for a moment, investors may be hesitant to invest billions to get the drilling business back up and running again.
Even for more glamorous jobs than oil drilling, labor is hard to come by right now.
The supply challenge we are seeing today may have been caused by the invasion of Ukraine by Russia, but it has been a decade in the making. Investment in oil drilling has not matched the growth in demand in the developed world. I think high oil prices will stay here for a while.