Will oil prices present a major investor concern given implications to the global economy?
*Barron's, April 8, 2011
”Gauging the Economic Impact of Rising Oil Prices
Barclays Capital argues that $150-a-barrel crude could add more than three percentage points to worldwide inflation
Since its spike in mid-February, on the heels of the political developments in the Middle East, the oil price has become a major investor concern given the potential detrimental implications for the global economy.
Although the commodity-price increase since mid-2010 has been strongly rooted in demand expansion arising from a strong recovery in large emerging markets, the recent oil price increase resembles more of a supply shock.
Indeed, there is a distinct possibility that the recent oil price increase could intensify.
We have highlighted the potentially revolutionary nature of the Middle East situation for the global-oil market and do not rule out the possibility that it may bring about profound change in oil politics and the market structure.
In addition to this, the recent earthquake in Japan has highlighted the drawbacks of nuclear generation, also possibly influencing the oil-supply structure of the future. Moreover, these developments have taken place against the backdrop of strong medium-term fundamentals for the oil market, consisting of limited capacity availability and rising demand from populous, fast-growing emerging economies.”
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