“The oil price says a trans-Atlantic recession is almost nailed on,” says Russ Mould of AJ Bell. “Since 1970, the oil price has doubled year-on-year six times and on four of those occasions the US and UK have gone into recession within the next two years.” At around $116 a barrel, Brent crude is up by 475% since its March 2020 nadir. “Everyone is waiting nervously to see if 2021 makes it five out of six.”
Prices got an extra boost this week as G7 leaders discussed plans to impose a price cap on Russian oil. That may exacerbate existing supply problems. “About two million barrels a day of Russian oil and refined-product supplies” are unable to enter global markets at present because of sanctions, says Myra Saefong in Barron’s. “US production, meanwhile, hasn’t climbed back to pre-Covid-19 levels” because of “pandemic-related labour shortages and supply-chain constraints”.
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