Oil Prices Unpredictable, Gold Defies Fed Rate Hike
Oil prices have been on a rollercoaster ride since July, and this week was no exception. Brent crude fell from $107 per barrel at the beginning of the week to around $103 on Friday afternoon. Despite this drop, many analysts expect oil prices to rise further due to ongoing supply disruptions.
JPMorgan's professional oil analysts have lost their clear base case for the first time since the war began, citing unpredictable developments in the conflict with Iran and continuing supply chain issues. Meanwhile, a drone attack damaged Saudi Arabia's East-West Pipeline, causing another price surge last week.
Economist Robin Brooks considers the recent rise in oil prices to be an overreaction, arguing that the market is pricing in prolonged losses of millions of barrels per day when the disruption is primarily a temporary logistical issue. However, Kees de Kort disagrees, expecting oil prices to rise much further and describing the recent increase as 'only the beginning'.
The high energy prices are fuelling inflation, with fuel prices in the Netherlands continuing to rise sharply. Diesel has already reached €2.90 per litre, and it seems only a matter of time before the €3 threshold is breached for the first time. This will have a ripple effect on everyday products, making them more expensive due to higher freight rates and fuel surcharges.
The gold price has remained strong despite the Federal Reserve's 25 basis point interest-rate increase, which is generally unfavourable for gold. Gold ETFs have recorded inflows for eight consecutive days, the longest streak since October 2025, as investors flock to gold in anticipation of structural drivers remaining intact.
Canadian economist James E. Thorne believes the Fed is repeating an old mistake by raising interest rates during a supply shock. He argues that previous oil crises were exacerbated primarily by interest-rate increases and warns that the central bank risks amplifying another energy shock and causing a recession.