The last time oil spiked like this, the world escaped recession. Why the risks are higher this time. – Marketwatch

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    • #474323
      RCW2020
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      • Total Posts: 1,122

      The last time oil spiked like this, the world escaped recession. Why the risks are higher this time.

      Oil is absolutely exploding higher, thanks to the diminished appetite for Russian-produced oil, even after Western sanctions specifically exempted energy from the menu of restrictions imposed after the Ukraine invasion.

      The question is what impact this will have on the global economy. Madhur Jha, senior global economist at Standard Chartered, looked at the 2011 experience when energy prices also soared. “There are some clear similarities between the global conditions that preceded the 2011 surge and the current one — including a nascent economic recovery, supply-chain disruptions, and heightened geopolitical tensions,” she said.

      Back then, supply chains were disrupted by the Japanese earthquake and tensions were high due to the Arab Spring. Despite oil surging 30% in real terms, the world escaped recession. She identified three reasons — oil prices weren’t volatile even as they increased, there was falling energy intensity and there was an ample monetary policy cushion. Even so, growth forecasts were lowered and inflation expectations were raised.

      Now, however, there are key differences. The scale of Russia’s invasion of Ukraine is what she called a worst-case scenario. “We think the oil market sees the security of Russian energy supplies as significantly compromised,” she said. Concerns about the reliability of Russian energy flows will limit the downside caused by the return of Iranian volumes, rising inventories, slowing demand growth and upside surprises in U.S. supplies.

      Link to source…

    • #474332
      GZeusH
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      • Total Posts: 5,508

      The FAO Food Price Index is higher now than it has ever been, more than the last peak in 2011 which triggered the Arab Spring.  Expect a lot of food insecure countries (read North Africa) to be in a world of hurt, and in no mood to play the European pile-sanctions-on-Russia game.

      Oh, and wheat on the Chicago Board of Trade is limit up (again) today.

      Hitler 1944: Kiev is to be held to the last man.
      Biden 2022: Kiev is to be held to the last Ukrainian.

      • #474357
        gordyfl
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        • Total Posts: 2,336

        Combined, Russia and Ukraine export over 25% of the world’s wheat.

        1) Russia: US$7.9 billion (17.7% of total wheat exports)
        2) United States: $6.32 billion (14.1%)
        3) Canada: $6.3 billion (14.1%)
        4) France: $4.5 billion (10.1%)
        5) Ukraine: $3.6 billion (8%)

        If Biden’s “crippling sanctions” succeed, the U.S. will pass up Russia in wheat exports.

        Also, if Biden’s crippling sanctions eventually succeed, the U.S. will exceed Russia in natural gas exports.

        I remember not long ago, Huawei passed up Apple/I-phones on global sales of smart phones. Next thing I know, U.S. levies sanctions against Huawei.

        U.S. economic / foreign policy — If you can’t beat’em, sanction them. I think someday all these economic sanctions will come back and bite us.

        Link: https://www.worldstopexports.com/wheat-exports-country/

    • #474365
      GZeusH
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      These days, it’s the Chinese who have the money to buy.  I wonder who they would rather buy from, their neighbor, or the loudmouth that wants one of their provinces to declare independence?

      Hitler 1944: Kiev is to be held to the last man.
      Biden 2022: Kiev is to be held to the last Ukrainian.

    • #474413
      gordyfl
      Participant
      • Total Posts: 2,336
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