FX.co ★ High oil prices to hinder global economic recovery

Some economists are now really concerned about rising oil prices. They reckon that a rally in the oil market may undermine the revival of the global economy. Such gloomy forecasts appeared after predictions that crude could rise above $100 per barrel. Besides, if this scenario comes true, soaring oil prices may boost inflation.

The long-term rally in the oil market may trigger a sharp jump in inflation and an economic downturn. If crude climbs above $100 per barrel by the end of February, the US and EU are likely to see a 0.5% increase in inflation in the second half of this year. According to JPMorgan Chase & Co., should oil prices advance above $150 per barrel, it will inevitably slow down the recovery of the global economy. As a result, inflation may approach the threshold of 7%.

"With inflation currently at multi-decade highs and uncertainty surrounding the inflation outlook already unprecedented, the last thing the recovering global economy needs is another leg higher in energy prices," HSBC economists wrote in a report.

Oil-producing countries will naturally benefit from the increase in oil prices. Analysts at Bloomberg assume that Russia may reap more than $65 billion in extra revenue in 2022. Earlier, Morgan Stanley reported that Brent Crude would reach $100 per barrel in the third quarter of this year. Goldman Sachs Group Inc. also saw oil at $100 in the third quarter.