Energy Markets Signal Winter Crisis Amid Ongoing Iran Conflict
Energy markets are signaling a potential winter crisis and rising interest rates due to the ongoing Iran conflict. Brent crude futures have surged above $100, but it's not just oil prices that are causing concern - diesel and natural gas prices are climbing even faster.
The European Central Bank has highlighted higher oil and gas prices as one of the risks pushing its inflation forecasts higher in the coming months. ECB President Christine Lagarde noted that refining margins, or the premiums oil refiners make when turning crude into consumable products like gasoline and diesel, have become a critical factor in setting interest rates.
The Bank of England Governor Andrew Bailey has also warned UK politicians about the impact of crack spreads - the premiums oil refiners make to process crude into fuel - on price pressures. Markets are expecting two increases in interest rates by February to help tackle inflation.