Will Higher Oil Prices Grease the Path to Recession?

By SNW Asset Mangagement via Iris.xyz

Oil prices are up 17% so far this year, and the news is filled with stories of higher oil prices greasing the path to the next economic downturn. Quite frankly, we don’t see this happening, as the facts tell a different story.

First, oil prices are not historically high. It may be hard to remember, but the average price of oil over the last ten years has been just about $75/barrel. So even if oil goes to $90 or more in the short term, it would not be out of line with other strong economic periods. Remember, oil was over $140/barrel during the boom times before 2008, and high oil prices were not the cause of the great recession.

Second, today’s relatively higher oil prices are due to recent supply constraints from Saudi Arabia and Russia, who desperately needed higher oil prices to balance their budgets. When oil was below $40 in 2016 these countries were in dire financial straits

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