Oil Price Impact on US Inflation Likely to Ease in 2027

DBS Chief Investment Officer for North Asia Yeang Cheng Ling expects the impact of rising oil prices on US consumer price inflation to ease in 2027. Speaking at a media briefing, he said that current US consumer price inflation assumptions are based on oil prices of around $100 per barrel. However, with oil prices already above this level, the high base set in 2026 will reduce the impact of any further increase in oil prices on inflation next year.

Cheng Ling pointed to Saudi Arabia's oil exports, which stood at around 6 million barrels per day in September, broadly in line with the country's average daily exports in 2025. He said that this indicates that oil supply is moving back towards normal levels.

The DBS official also noted that a softer impact from oil prices could provide the US Federal Reserve with greater flexibility on monetary policy. Markets have priced in one more rate hike in 2026, but forecasting the Fed's policy path has become more difficult, according to Cheng Ling.