Oil Price Impact on US Inflation to Ease in 2027, DBS Predicts

DBS Chief Investment Officer for North Asia Yeang Cheng Ling believes that the impact of rising oil prices on US consumer price inflation will ease in 2027 as supply and demand conditions normalize. Speaking at a media briefing, Cheng Ling stated that current US consumer price inflation assumptions are based on oil prices of around USD 100 per barrel.

He noted that oil prices have risen by approximately 50% from last year's levels, but the high base set in 2026 will reduce the impact of any further increase in oil prices on inflation next year. Cheng Ling also pointed out that DBS does not expect oil prices to rise by another 50% from current levels due to a normalization in both demand and supply.

The official cited Saudi Arabia's oil exports, which stood at around 6 million barrels per day in September, as an indication that oil supply is moving back towards normal levels. A softer impact from oil prices could provide the US Federal Reserve with greater flexibility on monetary policy, according to Cheng Ling.