Houthi Military Strikes Global Supply Chains Oil Prices and Inflation
Published / Last Updated on 12/01/2024
We warned late last year that piracy and drone attacks in the Red Sea by the Houthis may lead to global supply chains suffering, oil prices rising pushing fuel and other goods and services up meaning more inflation.
We started the year hoping for a stable year economically with a normal economical cycle of inflation falling, interest rates falling and both bond and equity markets recovering to set new records.
Many commercial vessels are now rerouting to Europe via South Africa adding both delays and additional costs which will no doubt hit both consumers and businesses.
Attacks on shipping have continued and so both the US and UK took limited military action overnight as a warning to Houthi rebels.
Today, oil prices have risen 4% alone to $80.50 per barrel, this is only back to where it was 2 months ago, but it certainly will feed through to fuel costs and transportation costs to make inflation even more stubborn. We have also seen a sift from equities into safe haven precious metals with equity markets in UK and Europe subdued and gold prices up.
Some fear an escalation of military action in the middle east and our hopes of a stable year economically have been dashed. We now expect the UK and Europe to fall into recession. 2024 could be yet another ‘rocky’ year if military action escalates.
