A Saudi production site victim of an attack:
The main cause of yesterday's surge in prices was the announcement of a new attempt by Yemeni houthis to attack Saudi Aramco's Saudi oil facilities.
According to reports, an oil storage yard in Ras Tanura, which is the site of a refinery and the world's largest offshore oil loading facility, was attacked by a drone. The drone was intercepted and destroyed before reaching its target.
It should be recalled that last Sunday, the Saudi Arabia-led military coalition fighting against houthis had already intercepted 12 armed drones, this time targeting civilian targets. This increase in violence comes at a time when the American administration of Joe Biden has urged the houthis to de-escalate after having removed them from the list of terrorist organisations in order not to hinder the delivery of humanitarian aid to Yemen.
The effects of this increase on inflation:
It should be noted that the current rise in oil prices is not without consequences, since it contributes to increasing the level of inflation through higher transport costs and thus a rise in the prices of many goods.
Indeed, we know that oil prices and inflation are closely correlated because the weight of black gold in the economy remains very important. However, an anticipation of an increase in inflation could have an effect on the rise in interest rates and this development is therefore being particularly monitored today in a global economic context that is still very fragile.
We also know that the link between rising oil prices and economic growth is a two-way street. Thus, growth affects the price of oil, but a rise in the price of oil also has an impact on productivity and economic stability. The rise in oil prices will thus lead to a negative supply shock, i.e. an increase in the price of intermediate consumption and a fall in overall output. This shock is then followed by a demand shock, which is also negative and caused by the rise in the price of goods.
Thus, many economists are not content to assess the current rise in crude oil prices as a sign of recovery, but are concerned about the effects of this surge on inflation and future economic growth. It will therefore be necessary to monitor any decisions that may be taken in this regard.