INSUBCONTINENT EXCLUSIVE:
Oil prices are about 50 per cent higher than a year ago.Oil's surge toward $100 a barrel for the first time since 2014 is threatening to
deal a double-blow to the world economy by further denting growth prospects and driving up inflation.That's a worrying combination for the
United States Federal Reserve and fellow central banks as they seek to contain the strongest price pressures in decades without derailing
recoveries from the pandemic
exporters stand to benefit from the boom and oil's influence on economies isn't what it once was, much of the world will take a hit as
companies and consumers find their bills rising and spending power squeezed by costlier food, transportation and heating.According to
Bloomberg Economics' Shok model, a climb in crude to $100 by the end of this month from around $70 at the end of 2021 would lift inflation
by about half a percentage point in the United States and Europe in the second half of the year.More broadly, JPMorgan Chase - Co
warns a run-up to $150 a barrel would almost stall the global expansion and send inflation spiraling to over 7%, more than three times the
Peter Hooper, who's now global head of economic research for Deutsche Bank AG
rally in commodity prices that's swept up natural gas too
Among the drivers: A post-lockdown resurgence in worldwide demand, geopolitical tensions ignited by oil giant Russia and strained supply
Prospects for a renewed Iranian nuclear deal have at times cooled the market.Still, the rise has been piercing
the global economy's energy
And the cost of a typical basket of them is now up more than 50% from a year ago, according to Gavekal Research Ltd., a consultancy.The
energy crunch also compounds the ongoing squeeze in global supply chains, which drove up costs and delayed raw materials and finished
goods.Vivian Lau, who runs a global logistics company based in Hong Kong, said her customers are already closely watching rising fuel
Sachs Group Inc., which sees oil at $100 in the third quarter, estimates a 50% increase lifts headline inflation by an average of 60 basis
multi-decade highs and uncertainty surrounding the inflation outlook already unprecedented, the last thing the recovering global economy
But it's economy remains vulnerable as producers are already juggling high input costs and concerns over energy shortages.With price
pressures proving more tenacious than earlier expected, central bankers are now prioritizing inflation fighting over demand support
United States consumer prices surprising to a four-decade high sent shocks through the system, increasing bets the Fed will raise rates
The Reserve Bank of India on Thursday also flagged oil prices as a risk.To be sure, the world economy is no longer the oil guzzler it was
during previous decades, especially the 1970s, and alternative energy offers some buffer
Other pandemic-era insulators include swelling household savings and higher wages amid a tight labor market.In the United States the
emergence of the shale oil industry means its economy is less vulnerable to fuel shocks: While consumers are paying more for gasoline,
domestic producers are earning more.Mark Zandi, chief economist for Moody's Analytics, estimates that each $10 per barrel increase shaves
0.1 percentage point off of economic growth the following year
budget, for example, could reap more than $65 billion in extra revenue this year, helping buffer the Kremlin against possible sanctions
Other emerging market producers would benefit, as would Canada and Middle Eastern economies.But for most consumers, and central bankers,
TheIndianSubcontinent staff and is published from a syndicated feed.)
