Friday 17 February 2012

Guest post: beware oil at $120 a barrel | beyondbrics – FT.com

Investors’ eyes are still locked on Greece. But some sort of Greek deal is already in the price in the markets. What isn’t, however, and what now presents a big risk, is oil.

Geopolitics and plenty of liquidity have quietly driven the price of Brent to $120 a barrel. This is where it starts to hurt. Even in Asia.

Exports are the obvious headache. In recent months, US consumers have stepped up and offset weakness in Europe. But American shoppers are notoriously sensitive to the price of gas. Recall early 2011: the year started equally promising until the relentless rise in oil prices snuffed out America’s recovery. So far this year, the climb in the cost of gasoline in the US has been even sharper than in 2011.

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