Oil prices will probably rise much more

Given the rapid growth in global demand for oil and the decline in investment in exploration and production and in new oil field discoveries, oil prices are likely to rise further, unless there is a significant slowdown in global growth. We should therefore expect to see: A significant slowdown in household demand in OECD countries due to the low indexation of nominal wages to prices; Problems in emerging countries that are major energy importers; Increased pressure on Saudi Arabia from the United States for it to increase its production; A tricky situation for central banks, given higher inflation and weaker growth; Higher long-term interest rates and a muted negative effect on credit spreads and share prices, as profits are protected by the low nominal wage indexation to prices.