Oil price is showing a global slowdown is on the cards. Pressured by both China's slowing economy and the U.S. possibly on the verge of a recession and/or stagnated growth.
The oil price is showing both the economic China slowdown and also U.S. oil consumption falling after the 2021 post COVID reflation snapback/Ukraine war/Biden's SPR release and the Russian oil cap, which have contributed in sending the price of oil down from its $131 highs March 2022 to its 2023 lows of $63 a barrel. The Chart 1 above shows the price average over a 5 year period at $45 between April 2016 and Nov 2020, note the horizontal blue lines with 'price notes'. I would argue, that even if America does fall into a recession, the oil price would need to fall below $45 to justify a deflationary economy. However, if the U.S. goes into recession, which may or may not affect China, as the country is already recording close to zero inflation, the oil price remains sticky at over $50 a barrel, the stagflation call remains: inflated prices, stagnated economy and high unemployment.
Chart 2, is self explanatory.
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