Not so far.
The contribution of the last oil price spike, which peaked last July at $147, towards the depth of recessions seen around the world today is not exactly a widely-held view, but as we’ve written previously, it’s gaining momentum with several economists now saying there does appear to be some evidence for it. Opec likes to say it has helped the world’s economy through lower oil prices during the recession.
The rapid rise of oil prices in recent weeks – and particularly in recent days – poses the inevitable question of what it will mean for the world economy – and a couple of SeekingAlpha have already worrying about it.
Today’s prices (so far at least) don’t seem to be a cause for concern. Merrill Lynch/Banc of America’s Francisco Blanch suggested last week that up to $80 would be tolerable for OECD countries, and that above that, Opec was likely to increase production, as it now has spare capacity.
A report by Jeff Rubin, then the chief economist at CIBC Markets, would also suggest today’s prices are not a threat: “If triple-digit oil prices are what started the recession, then $60 oil is what will end it,” he postulated.
So we are not in the danger zone yet. But could we be headed there?
Since Saudi oil minister Ali Naimi’s bullish comments on Wednesday, oil prices have broken sharply through the 200-day moving average. A similar move in a few years ago heralded the beginning of the climb towards $147.
Most analysts believe it is risk appetite and speculation that is driving the recent rise in oil prices. The real question will be whether prices will continue to climb – and how fast.
Oil prices caused the recession, redux, and what it could mean (FT Energy Source, 26/05/09)
If high oil prices are what caused the recession, then lower prices should… (FT Energy Source)
Was the US recession caused by the oil shock of 2008? (FT Energy Source)
Further evidence on the influence of oil on the US economy (The Oil Drum)
Can the oil shock alone explain the financial crisis? (Atlantic)
Did the oil boom of 2008 cause crisis? (WSJ)