Analyst: Oil prices hit over two-year highs, and the current situation poses a real risk to the global economy

Odaily Planet Daily reports that after Qatar’s energy minister warned that oil production in the Gulf region could halt entirely within days, oil prices have risen to their highest level in over two years. Rystad Energy analyst Jorge Leon stated that the current situation poses a real risk to the global economy. If this situation lasts more than two weeks, the impact on the energy system and global macroeconomic outlook could be significantly greater. If Gulf countries cannot export oil, they will need to store it, and once storage is full, production will have to stop. It is “realistic” to expect oil prices to exceed $100 per barrel, but the key question is how long prices will stay at this level. At that point, governments around the world are likely to release their oil reserves, similar to the response after the Russia-Ukraine conflict. Quilter investment strategist Lindsay James said that a long-term halt of all oil and natural gas production in the Gulf region is an extreme scenario. Market trends indicate that investors expect the disruption of Strait of Hormuz traffic to be resolved quickly, but the risk that the conflict lasts longer than initially expected is increasing daily. For households, the main pressure will be on energy prices rather than broad inflation shocks. The greater economic risk comes from sustained rising energy costs, which could severely hamper economic growth. (Jin10)