$100 Oil Manageable, But Expect Higher Inflation Amid Ongoing Conflict

The recent surge in oil prices is causing concern, but experts at BMO believe the global economy can manage through current levels.

According to Chief Economist Doug Porter, Canada has experienced its largest monthly gasoline price hike on record. However, when adjusted for inflation, oil prices are around where they hovered between 2005 and 2015.

'We have been here before,' said Porter, 'and... the global economy can certainly manage $100 oil.'

Higher oil prices do create inflation pressure, with BMO expecting it to rise from 1.8 per cent in February to a little above three per cent in April. However, this is not expected to prompt the Bank of Canada to raise interest rates.

The outlook is based on some level of resolution to the Iran war allowing oil to come down and average between $80 and $85 a barrel for the year.