As the market reacts the weekend attack on Saudi oil facilities, the level of anxiety is mounting. Forbes published an article on Sunday entitled “Attacks on Saudi Arabia are a recipe for $100 oil”.
Bloomberg that this represents the biggest disruption to global oil supply since the Iraqi 1990 invasion of Kuwait.
As visions of the 1974 Arab Oil Embargo and the ensuing recession dance in traders’ heads, this is a timely reminder that the FOMC is meeting this week. Should the supply curtailment become prolonged, how should policy makers react to supply shocks? As well, there is a case to be made that the world is facing more than just one supply shock.
Supply shocks explained
What is a supply shock? Nouriel Robini explained it this way in a Project Syndicate essay:
Over time,Read More »