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Oil Is the New Greece: HSBC Chief Economist
CNBC.com | March 05, 2012 | 01:42 AM EST

Rising oil prices have displaced Greece as a source of investor anxiety, a new HSBC report says, warning that if the trend of rising oil prices persists, a fragile economic recovery in the developed world could quickly be derailed ,and inflation could return to emerging markets.

Oil prices have risen to all-time highs in euro and sterling terms in recent days and are edging close to the $147 per barrel high seen in 2008, mainly as a result of rising tensions over Iran.

HSBC Chief Economist Stephen King said in the report that sanctions against Iran have already led to supply shortages which have doubtless lifted oil prices.

There are also plenty of other Iranian-related issues to worry about, he said.

“Has Iran developed a nuclear capability, will there be a war with Israel or, indeed, the U.S., and, in a bizarre self-defeating act of retaliation, would Iran be tempted to seal the Straits of Hormuz?” he asked.

King pointed out that the rise in oil prices was not just a result of geopolitical tensions however.

One explanation for the latest increase is the impact of quantitative easing .

"If the supply of paper money is constantly being increased, its value will fall relative to alternative stores of value,” he said.

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