This oil supply shock is unlikely to impact 2011 GDP, unless the world’s producers experience a whole new level of political upheaval, according to Societe Generale’s head of global economics Michala Marcussen.Marcussen says that while the latest episode of upheaval in Libya is unsettling markets in the short term, this isn’t going to impact headline GDP for the year.
As a rule of thumb, a permanent $10/bbl increase in the price of oil will take an estimated 0.25pp off global GDP in the year following the shock, all else being equal. Rarely, however, are all things equal. Dissecting the recent surge in oil prices, we conclude that, in all likelihood, the current shock will have no substantial impact on the global outlook as we expect this SUPPLY-driven shock to prove temporary.
There is the possibility, however, that oil prices spike all the way to $200 a barrel, if we see more revolutions in key producers, specifically Saudi Arabia, according to Marcussen.
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