This month, crude oil prices reached above $100 per barrel, fueling concerns about the energy crisis and its impact on the global economy. Experts believe that this situation could lead to a serious energy shortage in the fall and winter, with noticeable consequences for inflation and economic growth.
Ceasefire Agreement and Its Consequences
Last summer, the United States and Iran signed an agreement to extend a ceasefire that allowed over 130 oil tankers to transport their cargoes from the Persian Gulf to global markets. However, this agreement quickly collapsed, and there is currently no clear outlook for an end to the conflicts. Alongside this, the war between Russia and Ukraine has also put additional pressure on energy prices.
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Key Points in the Energy Crisis
Economic experts warn that the current situation may lead to a phase of "Oil Shock 2.0." Joe Bruelas, chief economist at RSM US, states that central banks will have to reduce economic growth to control inflation. In this context, Neil Shearing from Capital Economics warns that if crude oil prices remain in the range of $110 to $120 over the next six months, global economic growth will decline to around 2 percent.
Moreover, the current crisis has somewhat transformed into a fuel crisis. While crude oil prices are recognized as a warning indicator for the global economy, consumers are actually purchasing gasoline, diesel, and jet fuel, and it is these prices that are transmitted to inflation. During the war, fuel markets have faced more pressure than crude oil markets.
Refinery capacity shortages and the high cost of transporting fuel to areas in need are among the reasons for these pressures. In June, independent refineries in China reduced their production to the lowest level in nine years, and in Russia, drone attacks on refineries have brought refining output to its lowest level in over two decades. This situation has caused diesel prices in the U.S. and Europe to rise above $200 per barrel.
Ultimately, given the rising prices, it is expected that we will continue to see pressures on energy markets in the near future. Political and military tensions globally, especially in the Persian Gulf, could lead to the continuation of this crisis and further price increases.
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