From December 5, double restrictions on oil trade from Russia

Financial markets reacted quite calmly to the uthe fall of the missile on the territory of Poland. However, this event reminds him that the war can still have a significant impact on the world markets. Right now, we should pay close attention to the situation in the oil market, as an increase in the price of oil above $100 per barrel may make it difficult to fight inflation. In the scenario of an increase in oil prices, inflation in Poland may reach as much as 25% at the beginning of the year.

Relative calm

The fall of the missile on Polish territory was calmly taken over by global markets. In the evening, the zloty weakened, but it managed to make up for some losses. Volatility in the euro/dollar pair has also increased, but the euro continues to strengthen against the dollar. This event reminds us that the war continues to have a significant impact on world markets. And once again, it could make the fight against inflation more difficult if oil goes above $100 a barrel. In such a scenario, inflation in Poland may approach 25% at the beginning of next year.

War still has a large direct and indirect impact on the market situation. The current improvement in sentiment on the stock exchanges is the result of a fall in inflation in the US to 7,7 percent, which is well below previous forecasts. The level of inflation both in the USA and in Poland is significantly affected by oil prices. In the US, energy prices account for 8,2 percent. in the inflation basket, in Poland transport is responsible for about 9,5 percent. as part of the CPI reading. There is therefore a risk that a renewed rise in oil prices above $100 per barrel may partially dampen the current optimism.

From December 5 another

Petroleum it may go up because we are dealing with a tense situation on both the production and demand sides. Already on December 5, double restrictions on the trade of Russian oil will come into force. It will be introduced by EU ban on buying oil from Russia by sea and the fixed maximum price for such raw material announced by the G7 countries. In practice, it will mean that oil from Russia will disappear from the markets available to the world's largest economies. And this will mean a decrease in oil supply by 2-3 million barrels per day (which is 2-3 percent of global demand). For comparison, the average recession over the last 50 years (excluding the crisis related to the coronavirus pandemic) reduced global demand for oil by about 1,6 percent. This shows that the next stage of Russia's elimination from the international oil market may result in an increase in the price of the raw material on world markets.

The more it will be possible, because for December OPEC announced increased production cuts, while U.S. Special Reserve Petroleum (SPR) sales are declining. Global drilling activity is still close to half of previous highs. China, on the other hand, is lifting Covid restrictions and starting to help the real estate sector, which may limit the decline in demand. Like a colder winter. It is also worth remembering that the indicated bans from February 5, 2023 will also cover all refined products from Russia.