Geo-Political Risk, Rising Oil, Double-Dip?
A sustained and significant rise in oil prices could derail the global economic recovery by stirring inflation and putting the brake on spending. What's going on in the Middle East is driving oil prices higher, which have risen 7.35% since the start of the year. The worry is whether or not there will be supply disruptions like the ones that came with the 1973 oil embargo and the 1979 Iranian revolution.
Most economists reckon that the price of oil would have to rise to at least $120 a barrel and stay there to threaten the recovery. Past price hikes have fed recessions. In this case, however, because the rising price is not demand driven, Central Banks are unlikely to raise rates, unless higher oil begins to feed into the prices of other goods and services; that's uncertain given high unemployment in developed countries along with idle manufacturing capacity.
So buying opportunity or time to sell? That begs the question: Can the Middle Eastern people be bought, or is it more than just sharing the wealth?
GB
Most economists reckon that the price of oil would have to rise to at least $120 a barrel and stay there to threaten the recovery. Past price hikes have fed recessions. In this case, however, because the rising price is not demand driven, Central Banks are unlikely to raise rates, unless higher oil begins to feed into the prices of other goods and services; that's uncertain given high unemployment in developed countries along with idle manufacturing capacity.
So buying opportunity or time to sell? That begs the question: Can the Middle Eastern people be bought, or is it more than just sharing the wealth?
GB
posted by Gordon Bell at
6:46 AM
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