So Red Sea volatility would only cause oil to spike. Not all inflation. So it could cause CL prices to rise marginally. Big picture tho, very unlikely that the event causes a persistent rise in oil prices. It’s more of a one off event
I was more thinking the rise in shipping cost could have an effect on inflaiton. Especially if there is some sort of envornmental disaster like an oil spill. Is this something you're not too concerned about? We came close to this last night with the missile strike on the British Tanker. This article references the inflation concerns due to shipping costs https://www.cnbc.com/2024/01/11/red-sea-crisis-could-jeopardize-inflation-fight-as-shipping-costs-spike-globally.html
Also it's all about geography. The inflation impulse from the Red Sea disruption will affect cargo ships going to Europe (predominantly from China) much more than the US which are taking the Pacific route and thru the Panama Canal in the EC (also there's an issue with the canal which is something to monitor) but again it comes down to how much does that really contribute to the overall inflation impulse. For countries like the US where the majority of trade is from Canada and Mexico it will be less affected.
So Red Sea volatility would only cause oil to spike. Not all inflation. So it could cause CL prices to rise marginally. Big picture tho, very unlikely that the event causes a persistent rise in oil prices. It’s more of a one off event
I was more thinking the rise in shipping cost could have an effect on inflaiton. Especially if there is some sort of envornmental disaster like an oil spill. Is this something you're not too concerned about? We came close to this last night with the missile strike on the British Tanker. This article references the inflation concerns due to shipping costs https://www.cnbc.com/2024/01/11/red-sea-crisis-could-jeopardize-inflation-fight-as-shipping-costs-spike-globally.html
The shipping cost dynamic is going to be very closely related to the same energy logic I laid out.
Obviously anything could turn into something way worse. Right now I’m not very concerned about it.
Also it's all about geography. The inflation impulse from the Red Sea disruption will affect cargo ships going to Europe (predominantly from China) much more than the US which are taking the Pacific route and thru the Panama Canal in the EC (also there's an issue with the canal which is something to monitor) but again it comes down to how much does that really contribute to the overall inflation impulse. For countries like the US where the majority of trade is from Canada and Mexico it will be less affected.
Any thoughts on if the tensions in the Red Sea are a potential risk for inflation spiking?