Oil market close to 'tipping point' that could threaten stocks - Evercore founder
A sharp rise in oil prices to $150 a barrel could trigger a major inflationary shock for the global economy, says the head of Evercore / Photo: Unsplash/Colton Sturgeon
Oil prices may soon create new problems for the stock market, which has so far shown surprising resilience, according to Roger Altman, founder and chairman of the board of directors of Evercore investment bank. He said this in an interview with CNBC on Ma. 18.
Details
"The big question now is [...] are we now approaching a tipping point for the oil market and are we going to see a really significant increase in oil prices in the next two weeks," Altman said(quoted by MarketWatch).
A spike in the cost of oil could destabilize markets, causing "the second major inflationary shock of this decade after COVID," especially if prices rise to $150 a barrel or higher, the Evercore founder said. In that case, it's hard to envision markets simply ignoring it, Altman said. "Although that may be the case," he didn't rule it out.
Investors have so far largely viewed the recent increase in inflationary pressures due to energy as temporary, but the factors that helped mitigate the effects of tightening oil supplies are starting to fade, according to Evercore's chief executive.
He noted that between 12 million and 14 million barrels of oil per day had left the market, with average global consumption of about 102 million barrels per day. So far, the effect has been mitigated by accumulated oil stocks, tankers already at sea, the use of strategic reserves and large stocks in China. The market, according to Altman had backup sources of supply. However, these opportunities have already shrunk and may soon cease to protect the market from the full effect of the supply shortage, warns the American financier.
The economy and markets looked very strong before oil prices soared on energy thanks to robust corporate profits, consumer stability and business investment, much of it related to AI, but not exclusively, Altman said. However, oil may now outweigh all these positive factors, he believes. If the U.S. manages to reach a peace agreement with Iran and oil prices return to the $70-80 a barrel range by the end of the year, the economy and markets will be "in good shape," he said. "But right now it looks like the opposite will happen, and that's dangerous," the businessman concluded.
Brent crude oil rose by 0.4% to $109.7 per barrel at the auction on May 18. The price of the American grade WTI decreased by 1.4% - to $107.12 per barrel.
This article was AI-translated and verified by a human editor
