Rising oil prices pose another headwind for the global economy after the "zero" promises made by President Donald Trump for the sale of Iran's oil.
Brent crude rose by about 40 percent this year and the highest in six months. While higher prices due to high demand, as a rule, reflects the strong global economy, the shock of limited supply with the & # 39 is negative.
Much will depend on how the ear is stable. Exporting countries will benefit from a boost to corporate and government revenues, while consumer countries will bear the costs of the pump, potentially fanning inflation and hurt demand. After all, there comes a time when higher prices can be devastating for everyone.
1. What does this mean for global growth?
The impact will be Var & # 39; iravatstsa. Rising oil prices hurt household income and expenditure, and this may accelerate inflation. C & # 39 As the largest importer of oil in the world, China is vulnerable, and are also dependent on imported energy in many European countries. Seasonal effects are also affected. With summer in the Northern Hemisphere & # 39; and approaches, consumers can switch between energy sources and the use of cuts. The slowdown of the world economy will also hurt demand and expansion to keep a lid on prices.
2. As the global economy absorbs oil at $ 100?
For long-term exposure to growth, economists say that oil will need to hold above US $ 100. It also depends on the strength or weakness of the dollar, given the cost of raw greens. Oxford Economics analysis showed that Brent at $ 100 US per barrel by the end of 2019 means that the level of the world's gross domestic product will be 0.6 percent lower than currently projected by the end of 2020, adjusted for inflation by an average of 0 7 percentage points higher.
"We see an increased risk of significantly higher oil prices," Oxford economist John Payne and Gabriel Stern wrote in a note. "In the short term, it is likely to influence the delivery will be offset by increased production in other countries, but the market has tightened, and all it would take another shock to food and oil could reach $ 100"
3. Iran and Trump will affect the market?
Straightening of world oil trade spat over Iranian-Trump may continue to have a significant impact on the financial markets as well as the defeat of entire power 800,000 barrels per day. Uncertainty surrounding the availability has whipsawed oil markets. And the political sensitivity of these events in other markets bracing volatility.
Trump has promised to help, along with Saudi Arabia and U.A.E., those who need to transfer orders from Iran to another provider. But the US argued that its domestic supply can help offset the loss of & # 39 are the high bar to meet, given that the daily American outlet for such crude oil is about a quarter of Iran.
4. Who benefits from high oil prices?
Emerging economies dominate the list of oil-producing countries, why they suffered more than the developed ones. The increase in revenue will help repair budgets and the current account deficit, which allows governments to increase spending, which will stimulate investment. Winners include Saudi Arabia, Russia, Norway, Nigeria and Ecuador according Nomura analysis.
5. Who will lose?
These emerging economies are fed current account and budget deficits risk of capital outflows and weak currency, which, in turn, will cause inflation. This, in turn, force the government and central banks weigh their options: raise interest rates as growth slows down or ride it out and venture capital flight. Nomura losers list include Turkey, Ukraine and India.
6. What does this mean for the world's largest economy?
While US crude N manufacturers are trying to use any increase in sales from customers who switch from Iran, the broader US economy does not necessarily see the advantage in the oil price tag higher than $ 100 per barrel.
It would be a squeeze on American consumers that a & # 39 are still the basis for sustainable economic growth. Prices at the gas pump have risen 6.3 percent this month to $ 2.87 per gallon, which could weigh on retail sales, which jumped in March, the most since 2017 the United States.
And if things go awry in the world oil markets, there is a risk that the political moves of wine back to the US in favor of sanctions, which may mean clearance through investment or other means, which threatens economic stability.
7. Will this lead to higher inflation in the world?
Since the energy features prominently look at the major indices in gauges of consumer prices, policies that remove volatile components. If the price run-up is substantial and sustained, that these costs will be filtered out prior to transportation and utilities.
8. What does this mean for the central banks?
At the head of the Federal Reserve System, the central banks around the world have adopted peaceful and tilt, as the absence of inflation allows policy makers to shift their attention to slowing growth. This is unlikely to change soon. The International Monetary Fund this month cut its global growth forecast and said the world is in a "delicate moment."