Fears are brewing over an oil-price shock that could rattle markets and the economy [View all]

By Jennifer Sor, Business Insider

That was a dire combination the US economy saw in the 1970s, but analysts say that the risks of another oil price shock — a situation where oil prices abruptly surge and set off a domino effect of negative consequences in markets and the economy —are on the rise as geopolitical conflict escalates.

Oil prices spiked in recent weeks as the US conducted its raid on Venezuela and threatened to take military action in Iran — two of the world's largest crude producers.

March contracts for Brent crude, the international benchmark, rose 10% in the last week, and jumped by as much as 3% to trade above $65 a barrel on Tuesday. It's the highest price for Brent since November.

Should Brent oil hit $80 a barrel, that would probably constitute an oil price shock, according to José Torres, a senior economist at Interactive Brokers.

In that scenario, Torres said he believes bonds and stocks would sell off in tandem, as higher energy prices could stoke inflation, which could weigh on economic growth. Higher inflation could also mean the Fed has less room to cut interest rates down the line, a major catalyst that has pushed risk assets higher in the past year.

https://www.businessinsider.com/oil-prices-supply-shock-brent-crude-iran-venezuela-2026-1