Where are oil prices headed?
Haebom
Recently, oil prices have been holding steady due to various factors. This trend is having a significant impact on the economy, politics, and geopolitics. While there were frequent predictions that production would be affected by the war between Israel and Hamas, and worries that it might escalate into a broader Middle East conflict, oil prices have instead been fluctuating up and down.
Why are oil prices both falling and rising right now?
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Decrease in U.S. crude oil inventories: In the United States, crude oil inventories have dropped more than expected, but production has been ramped up through shale gas extraction and other means to make up for it.
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Europe's economic slowdown: As Europe's economic figures have weakened, energy demand has declined. Slow economic growth in Germany, the Eurozone, and the UK in particular has weighed negatively on oil prices.
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Instability in the Middle East: Oil prices have risen as clashes broke out between Israel and Hamas, and while there were hopes that U.S. mediation would calm the situation, the possibility of a larger escalation is still up in the air.
Impact of rising oil prices:
Global economy:
Rising oil prices can lead to increased production costs and push up consumer prices, driving inflation higher.12
In 2023, oil prices have approached nearly $100 per barrel, mostly due to production cuts from Russia and Saudi Arabia.
In 2023, oil prices have approached nearly $100 per barrel, mostly due to production cuts from Russia and Saudi Arabia.
South Korean economy:
Rising oil prices can push inflation higher and increase production costs, which in turn raises the producer price index.2
Higher oil prices drive up consumer prices, raising the risk of stagflation—meaning inflation gets worse while economic growth slows down at the same time.2
Higher oil prices drive up consumer prices, raising the risk of stagflation—meaning inflation gets worse while economic growth slows down at the same time.2
Impact of falling oil prices:
Global economy:
When oil prices fall, raw material costs in global markets can drop, resulting in lower production costs and cheaper consumer prices.
South Korean economy:
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Falling oil prices led to South Korea's exports declining for the first time in 2023, due to weaker IT demand, dropping oil prices, and delays in global economic recovery.
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High energy prices and interest rates are putting pressure on global demand, which impacts the international demand South Korea relies on.
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Lower oil prices reduce import costs, which brings down operating expenses for companies and helps cut consumer prices.
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haebom@kakao.com
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I post articles related to IT 💻, economy 💰, and humanities 🎭.
If you are curious about my thoughts, perspectives or interests, please subscribe.
haebom@kakao.com