The rise in oil prices to $100 this week has prompted central banks to worry about inflation and economic recession. Following the escalation of the war in the Middle East and the diminishing chances of reaching a peace agreement, global oil reserves continue to decline. This price increase has specifically impacted diesel prices, with the cost of this fuel in the United States rising by 60% since late February, reaching a record $6 per gallon.
Impact on Global Markets
In light of these price increases, central banks, particularly the Federal Reserve of the United States and the European Central Bank, are under pressure. According to reports, about 90% of traders in a CME Group survey expect a 25 basis point increase in interest rates. Derek Tang, an economist at MPA Macro, stated that "people have finally realized the risks of the prolonged Iran war, and therefore, there is little hope for a decrease in energy prices."
Read more: Natural gas prices rise on the New York Stock Exchange due to high LNG demand and warm weather
Challenges from War and Rising Prices
The European Central Bank has also responded to these concerns by announcing a 25 basis point increase in interest rates. The bank emphasized that "the conflict in the Middle East continues to exert inflationary pressures on production, and inflation will remain above target for an extended period." In this situation, companies are seeking to maintain their energy costs, but ultimately, they will be forced to pass these costs onto consumers.
Market analysts believe that the rise in diesel prices and concerns stemming from reduced oil supply, especially in the northern half of the year and the peak demand season for oil and diesel, could intensify inflationary pressures. Additionally, the war in the Middle East and recent attacks on energy infrastructure threaten 4% of global oil supply, which could have serious consequences for the global market.
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