Economist Peter Schiff Predicts Dollar Index Drop Could Propel Oil Prices Above $100
- Shams Ul Zoha
- July 17, 2023
- 11:15 am
WHAT YOU SHOULD KNOW
- Economist Peter Schiff suggests that a potential drop in the dollar index could lead to oil prices exceeding $100.
- A surge in oil prices could have a pass-through effect, increasing U.S. import costs and potentially reversing the progress made by Federal Reserve rate hikes in reducing inflation.
- The Federal Reserve began hiking rates in March 2022 to address inflationary pressure caused by pandemic-related stimulus measures.
Economist and gold enthusiast Peter Schiff predicts a potential decline in the dollar index, which could have significant consequences for oil prices. Schiff suggests that if the dollar index quickly drops to 90, it could propel oil prices above $100 and put upward pressure on U.S. import costs. He points out the inverse relationship between oil and gold, highlighting how oil has been experiencing weakness following its strong performance in the first half of 2022
In recent trading, the West Texas Intermediate (WTI) grade crude oil has seen some volatility. After reaching above $100 per barrel on an intraday basis in July 2022, it declined to a low of $63.64 in May 2023. However, it has since staged a recovery and currently stands at $76.81, with a slight 0.10% decrease. The decline in inflation in July 2022 can be attributed, at least in part, to the pullback in energy prices.
Schiff warns about the pass-through effect of higher oil prices on U.S. import costs. He suggests that the resulting increase in prices could reverse any progress made by Federal Reserve rate hikes in reducing inflation. The Fed started raising rates in March 2022 to address inflationary pressure caused by pandemic-related stimulus measures. However, some economists argue that the Fed may have acted too late in curbing inflation and has gone beyond what is necessary.
Investing Salary provides free access to quality, truthful news for everyone, believing that information should be equally accessible. We hope that this will enable more people to stay informed about current events, understand their effects, and be motivated to take action.
If you feel that we have helped you get the right market knowledge please consider supporting us through Patreon. Even a single dollar counts.
Related news
Popular
