Expensive oil, expensive grain - inflation will sweep the world

WTI Crude Oil today exceeded USD 107 a barrel, prolonging the 8% increase from the previous session. Today, the OPEC + countries may announce a decision to increase production, but according to market expectations, they will not make any extraordinary move.

Executive director IEA Fatih Birol said on Tuesday that the current situation in the energy markets was very serious and needed full attention. Yesterday it was also decided to release 60 million barrels of oil from emergency reserves. The move did little to curb soaring oil prices, which hit new 7-year highs, as the deepening war in Ukraine and expanding sanctions against Russia increased fears of further supply disruptions.

Expectations: OPEC + will keep the plan

OPEC + will meet today to discuss mining policy. Despite the market turmoil caused by the Russian invasion of Ukraine, OPEC + is expected to stick to its modest supply expansion plan.

The American Petroleum Institute reports that US crude oil inventories fell by 6,058m barrels in the week ended February 25, 2022, after dropping 5,983mn barrels in the previous week and compared with market expectations for an increase of 2,796mn barrels barrels.

The price of the war

In addition to oil prices, grains, of which Russia and Ukraine are the main producers in the world, also seem to rise significantly. It may also exert inflationary pressure around the world and, consequently, may also cause stagflation.

The economic growth of the world economy may be jeopardized and the price level rising. For it seems that the economic consequences of the war for the entire world are about to begin. They will be a cost that - as almost everyone emphasizes - must be borne so that the world is not further terrorized by the president of the Russian Federation. The cost will be a further increase in inflation due to the increase in fuel and food prices.