The surge in oil prices has been driven by the Russian/Ukraine crisis. From a growth perspective, one of the cures for higher prices is said to be ‘higher prices’. The huge spike in oil prices will be felt by consumers and producers worldwide. This makes the current inflation crisis worse and has the potential to hinder global growth. This means that over the medium term the current rise in oil prices do not look very sustainable, especially if those high prices start to weigh on global growth prospects. This is why high prices themselves are meant to be the cure for high prices.
Interestingly, oil has a period of weakness ahead right now that the Seasonax screener has uncovered. Over the last 22 years, oil has fallen 12 times for an average fall of -2.24%. If the geopolitical risk fades then oil prices could fall quite sharply and this seasonal pattern is notable.
Major Trade Risks: The main risk here is that risk-off trading on geopolitical concerns over the Russian/Ukraine crisis results in further spikes higher in oil prices.