In brief from an ING note on oil and the implications of the high price for central banks.
- Surging oil prices have become the new concern for central banks, aggravating the current trilemma: how to balance slowing economies, still too-high inflation and the delayed impact of unprecedented rate hikes.
- the recent surge in oil prices will make things even more complicated as it will both worsen the economic slowdown but also push up inflation (or at least reduce the disinflationary trend)
- Our commodities analyst ... expects oil prices to break above 100 USD/b in the near term as supply cuts by OPEC+ countries more than offset weaker demand due to the global economy’s slowdown. However, he doesn’t see oil prices remaining above 100 USD/b for long as weaker demand and political pressure to increase supply should help to bring oil prices back to levels slightly above 90 USD/b.
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Earlier on oil:
Brent update:
