The central banks globally are worried about how they are going to tackle the return of oil to about $100 a barrel.
Federal Reserve, followed by peers at the Bank of England and Bank of Japan, may show varying degrees of vigilance at the prospect of more energy-driven inflation.
Together with the European Central Bank’s signal of its readiness to hike interest rates again, investor bets point to possible moves as soon as September within much of that club, even if economists are less sure.
“Brent’s rebound is no longer driven solely by the well-known risks around SoH and the latest Red Sea blockade, which threaten up to 4 mbpd of redirected Saudi crude exports. With visible shipping through Hormuz reduced to a trickle and global inventories already depleted, fresh supply disruptions are amplifying the squeeze,” said Madhavi Arora of Emkay Global.
Asian buyers, led heavily by China, are rethinking/reworking their approach on imported fossil fuels as renewables+batteries and electrification become increasingly viable substitutes. That structural transition is beginning to reshape the global demand equation, she added.
Russian fuel exports remain constrained after months of Ukrainian drone strikes, while Kazakhstan has begun cutting production following the shutdown of the CPC export terminal. Supply is tightening on multiple fronts.
US Fed rate decision is coming close on July 29. Suspense is high after June consumer price data in the US came in much cooler than expected. That’s been overtaken, however, by renewed hostilities in the West Asia.
For the Asia-Pacific region, several important monetary policy decisions and trade releases are set to roll out like from Singapore’s central bank.
Australia also reported June consumer inflation, and Reserve Bank of Australia Deputy Governor Sarah Hunter is scheduled to speak coming after June data showed the labor market still going strong, upping expectations for more rate hikes.
South Korea is also releasing its July trade stats before which the June figures for Hong Kong, the Philippines, and Thailand.
Oil At $100 Barrel: Global Central Banks To Reflect Worry In Rates
