Reserve Bank of Australia (RBA) Gov. Michelle Bullock explained the potential impacts of the ongoing Israel-Hamas conflict on oil prices and global inflation during her first public appearance at the AFSA Annual Summit Panel in Sydney.
Bullock pointed out that one immediate consequence of the conflict in the Middle East was the rapid surge in oil prices. She noted that higher oil costs have a cascading effect on petrol prices. In turn, these increased fuel costs have a direct impact on the overall inflation rate.
"The initial response to that shock was [that] oil prices rose again. One of the things you would have noticed is [that] the price of petrol even prior to that had been going up, and so that's likely to keep oil prices elevated as people are a little bit unsure about how it's going to impact the supply of oil," she said. (Related: Oil price hike incoming: Drones STRIKE two major oil refineries in Russia.)
According to data from trading economics, crude oil prices have surged by more than six percent since the outbreak of hostilities.
Bullock also raised the potential impacts on global economic growth, especially in regions like Europe. "At the same time, there might be a concern that all of these sorts of defense issues, these war issues, might impact lower growth in places like Europe. And that's a challenge as well because if that slows the world economy, that doesn't help either. So again, it's really a bit of a balancing act here with potential implications," she said.
Global economic uncertainty intensifies amid conflicts in Ukraine and the Middle East
Global economic uncertainty intensifies due to the ongoing Israel-Hamas conflict in the Middle East and the war in Ukraine.
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Brendan McKenna, an international economist at Wells Fargo, explained how the Israel-Gaza conflict may hasten deglobalization in an interview with CNN.
"We did have geopolitical relations start to improve in the Middle East, but because of what's going on in Israel and Gaza, it seems like we backtracked on a lot of that positive momentum," McKenna said.
McKenna explained that deglobalization may increase inflation and result in higher interest rates from the Federal Reserve and other major central banks. He stressed that geopolitical fracturing leads to reduced trade cooperation, less information sharing, diminished technology sharing, and weakened financial-market linkages, all of which contribute to deglobalization.
Bryan Mena, a writer for CNN Philippines, backed McKenna's explanation. Mena defined deglobalization as a trend or process where countries are moving away from the principles of globalization, where countries are interconnected through trade, capital flows and information sharing. Instead, it shifts toward more protectionist and self-reliant economic policies to protect domestic industries and reduce reliance on foreign trade.
Meaning, the ongoing conflict in the Middle East could lead to further economic fragmentation and strained relations between major economic players. It has created a volatile situation in the global energy market, with oil prices subject to rapid fluctuations. This volatility, coupled with supply chain disruptions and heightened geopolitical tensions, has increased uncertainty in the global economy.
Follow FuelSupply.news for updates on the already tight fuel supply amid the ongoing Israel-Hamas conflict.
Watch this Oct. 16 episode of "Brighteon Broadcast News" as Mike Adams, the Health Ranger, discusses the devastating consequences to the global economy of Israel's war on Gaza.
This video is from the Health Ranger Report channel on Brighteon.com.
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