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Analyst: Oil prices hit a more than two-year high; the current situation poses a real risk to the global economy
Svmuu News: Oil prices have risen to their highest levels in more than two years after Qatar’s energy minister warned that oil production in the Gulf region could come to a complete halt within days. Jorge Leon, an analyst at Rystad Energy, commented that the current situation poses a real risk to the global economy. If this situation persists for more than two weeks, the likelihood of significant impacts on the energy system and the global macroeconomic outlook will be much higher. If Gulf nations are unable to export oil, they will need to store it, and once storage capacity is exhausted, they will have to halt production. Expectations that oil prices will exceed $100 per barrel are “realistic,” but the key factor is how long prices remain at that level. At that point, governments around the world would likely release their strategic oil reserves, just as they did following the Russia-Ukraine conflict. Lindsay James, an investment strategist at Quilter, noted that a prolonged halt to all oil and gas production in the Gulf region represents an extreme scenario. Market trends suggest that investors expect the disruption to traffic through the Strait of Hormuz to be resolved quickly, but the risk that the conflict will last longer than initially anticipated is growing by the day. For households, the pressure will primarily come from energy prices rather than a broad inflationary shock. The greater economic risk stems from persistently high energy costs, which could severely hamper economic growth. (Jin Shi)
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