By Luisa Maria Jacinta C. Jocson, Reporter
A WIDER CONFLICT in the Middle East could send global oil prices skyrocketing, adding to concerns over inflation, analysts said.
According to a message sent by Security Bank Corp. Chief Economist Robert Dan J. Roces on Viber, a potential conflict between Israel and Palestine could have significant consequences for the oil market. Despite not being directly connected to oil production, the geopolitical importance of the region could cause oil prices to rise if the conflict intensifies and involves other Middle Eastern countries.
He stated that this increase would have a ripple effect on economies worldwide, possibly causing a third round of inflation.
On Monday, the price of oil increased by over 2% due to the ongoing military conflict between Israel and Hamas, causing concerns about a potential escalation.fl
Information and communication technology in the Middle East (See article “Global Outlook Faces Increased Risks with Middle East Conflict”).
At 0859 GMT, Brent crude saw an increase of $2.28 or 2.7%, reaching $86.86 per barrel. Meanwhile, US West Texas Intermediate (WTI) crude rose to $85.23 per barrel, up by $2.44 or almost 3%. Earlier in the session, both benchmarks experienced a surge of over $4 per barrel.
The decline in oil prices last week, which was the largest since March, was reversed due to a darkening macroeconomic outlook. Brent fell approximately 11% and WTI retreated over 8%. fi
Worries regarding the consumption needs of the world.
“If the crisis worsens due to”ff
According to Domini S. Velasquez, Chief Economist at China Banking Corp., if other economies become involved, there is a high chance that we will see an increase in oil prices due to Israel’s close proximity to oil-producing nations. This was conveyed through a message on the messaging app Viber.
Mr. Roces observed that the placement of dominant nations in the dispute “has the potential to either lessen or intensify worries about oil supply.”
Representatives from Phoenix Petroleum Philippines, Inc. stated that due to Israel’s minimal oil production, current events may have a minimal effect on oil supply.
The individual stated in a Viber message that ICT may spread and cause extended tension, ultimately affecting supply and pricing.
The rate of inflation increased to 6.1% in September, marking the highest recorded number in 9 months.fi
In the last five months, the average inflation for nine months increased to 6.6%, which is higher than the central bank’s forecast of 5.8% for the entire year.
In September, the price of gasoline increased by 3% while diesel saw an increase in inflation.fl
The consumer price index (CPI) basket includes a 2.4% contribution from fuels and lubricants used for personal transportation, resulting in a 3.8% increase in overall inflation.
To address the issue of increasing inflation, central banks may once again implement stricter monetary policies, such as increasing interest rates.fl
Mr. Roces also mentioned that this action could potentially bring about its own economic repercussions.
2019 was also driven by strong foreign
In addition to the cost of oil, Ms. Velasquez observed that the transfer of money in 2019 was also influenced by robust international activity.fl
Travel to the Philippines may also be affected.
boost from higher oil prices”
“An increase in oil prices could potentially enhance remittances from the Middle East.”ff
She stated that the situation could become particularly concerning if it poses a threat to Filipinos living abroad.
Saudi Arabia is the third largest contributor of remittances to the country.
Michael L. Ricafort, Chief Economist at Rizal Commercial Banking Corp., also mentioned the potential for Iranian involvement in the situation.flict.
In a message on Viber, he mentioned that the recent Israel-Hamas conflict has had an impact on the global market due to concerns about geopolitical tensions. The involvement of Iran, a significant player in the oil industry and supporter of Hamas, adds to these risks.
“In summary, the conflict is still in its initial phases and currently the market responses appear to be impulsive. However, this poses a potential threat to global economic conditions and therefore requires close monitoring.” – with Reuters