Global governments urged to cut spending and raise taxes to regain economic strength
The Organization for Economic Co-operation and Development (OECD) has issued a warning to global governments, advising them to cut spending and raise taxes in order to build up their “Fiscal Firepower” for the next economic shock. While inflation may have turned a corner, the OECD believes that governments have weakened their ability to respond effectively to future economic challenges.
One potential shock on the horizon is an oil price surge, as OPEC predicts that global oil demand will continue to rise significantly by 2050. This forecast has raised concerns about underinvestment in fossil fuels, leaving the market vulnerable to major price fluctuations.
Swiss UBS has reported that oil supply growth has been modest, keeping the market in a deficit and pushing prices higher. US oil inventories are falling rapidly, with significant declines reported in both crude oil and gasoline supplies.
Despite global manufacturing weakness, diesel inventories remain low, pointing to potential price support as winter approaches. The US has emerged as a major gasoline exporter, highlighting its role as a key player in the global refining market.
Tropical Storm Helene is impacting Gulf of Mexico oil production, adding to supply concerns. Geopolitical tensions, including secret negotiations between Iran, Russia, and Yemen’s Houthi rebels, have also raised uncertainty in the market.
Despite these challenges, market optimism remains high, with many believing that ongoing conflicts will not have a significant impact on oil supplies. However, the potential for escalation in these conflicts could lead to supply disruptions and further price volatility.
Overall, the current economic and geopolitical landscape presents both risks and opportunities for investors and consumers alike. Understanding these factors and staying informed can help individuals make informed decisions to protect their finances and navigate the complex world of global markets.