The oil market does not allow inflation to be brought under control

Futures contracts for WTI oil rose by over 1,5 percent on Wednesday, to over USD 116,5 per barrel, recording the sixth consecutive month of gains. In the United States, gasoline prices are breaking all-time highs, surpassing $ 4,2 a gallon.

Yesterday there was information that some members of the cartel OPEC + they are considering suspending Russia's participation in the production agreement. This could pave the way for them to pump more oil to the markets.

During the day, the price ranges from $ 118 to $ 113

The Persian Gulf countries plan to increase production in the next few months. Such information could theoretically lead to a reduction in raw material prices. However, it is more than offset by the decision of the European Union to partially ban the sale of Russian oil and the re-opening of China after lockdown, i.e. a potentially huge increase in demand.

As a result, crude oil quotations on world markets are highly unstable. Suffice it to mention that the three-month highs first fell yesterday when the WTI barrel was already above $ 118, but after that prices plunged below $ 113.

Fuel for the economic downturn

In the real economy, this may mean high fuel prices. We feel it in Poland, but also Americans, where the price of gasoline soared to an all-time high of $ 4,2 a gallon.

More expensive fuels are one of the main components of the increase in consumer inflation and, at the same time, an element contributing to the decline in demand in other categories. The more we spend on fuel, for example because we have to get to work, the less we spend in terms of unnecessary needs, recreation or entertainment. This, in turn, is a ready recipe for an economic slowdown, which the financial markets seem to have been pricing for a long time.