Here’s what happens if the oil rally turns into an ‘oil shock’

The global oil benchmark flirted with the $80-a-barrel level again on Tuesday, underlining concerns that an unexpectedly strong crude rally could eventually begin to weigh on economic growth.

The combination of renewed U.S. sanctions on Iran, potential sanctions on Venezuela, a rising geopolitical risk premium, strong demand and other factors have made talk of $100 crude sound less outlandish. Indeed, some analysts argue that the backdrop now leaves the market more open to potential price spikes.

So what if oil did climb back to triple digits for the first time since 2014? Economists led by Arend Kapteyn at UBS laid it out in a wide-ranging note on Tuesday.

In it, they observe that the rise in Brent LCON8, -0.75% from around $60 a barrel a year ago to close to $80 makes for the 11th largest price spike (see chart below) in 70 years (crude’s initial 2017 jump ahead of a February pullback was the 10th largest). West Texas Intermediate CLN8, -0.65% , the U.S. benchmark, was trading below $73 a barrel Tuesday afternoon.
details at: https://www.marketwatch.com/story/oil-shock-heres-what-100-crude-would-do-to-the-economy-2018-05-22

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