On Friday, a barrel of Brent oil cost just over $90. Before the war broke out, the price was just over $70. The same trend is evident for U.S. WTI oil.
Robert Bergqvist, senior economist at the bank SEB, believes that the oil price will remain high as long as uncertainty regarding oil transport and production in the Middle East persists and the US, Israel and Iran show no signs of moving towards the negotiating table.
Extremely stressed
This puts heavy pressure on both the market and the world's central banks.
- The market is extremely stressed now. And there is uncertainty about which additional countries may be involved, Bergqvist tells TT.
- The question marks have grown over the weekend.
G7 finance ministers held a meeting on the situation on Monday. Statements from there suggested that they may release oil from the reserves managed by the International Energy Agency (IEA), but that they are not there yet.
By Monday afternoon, the price had retreated slightly from the previous highs, to around $105.
The increases come, among other things, after Iran almost closed the Strait of Hormuz, where large amounts of oil are normally shipped.
“Low price”
U.S. President Donald Trump describes the price rally as "a small price to pay" to eliminate threats from Iran.
"Short-term oil prices, which will fall rapidly once the destruction of the Iranian nuclear threat is over, are a very small price to pay for the security and peace of the United States and the world. Only fools would think otherwise," Trump writes on his Truth Social platform.
Robert Bergqvist predicts that the risk of stagflation in the world economy, with declining growth and higher inflation, exists, although it is a bit too early to say anything definite.
- But the probability has increased that we will see stagflation.
