Oil Prices Above $100 Per Barrel Reignite Inflation Fears

Oil prices above $100 per barrel have reignited global inflation fears, analysts warn. The recent surge in oil prices has raised concerns about its impact on the economy if it stays high for an extended period.

Noureldeen Al Hammoury, chief market strategist at Equiti Group, said that higher energy costs would gradually feed into transportation, manufacturing, and food prices, slowing down the progress on inflation. This could lead to a slowdown in the global economy as well.

The US consumer inflation slowed more than expected in June, but the recent flare-up has reignited fears of higher inflation. The US Federal Reserve held interest rates steady last month, but officials signaled their next move may be a rate increase due to inflation concerns.

Goldman Sachs predicted that Brent would rally to more than $120 a barrel by the fourth quarter if disruptions in the Strait of Hormuz persist. Soojin Kim, a research analyst at MUFG, said that with both Hormuz and the Red Sea exposed to disruption, the market is pricing a broader logistic-driven supply shock.