The global economy looks to be creaking some under the strain of higher interest rates, with the US in seemingly the best relative spot. Job markets have been particularly resilient, likely as the impact of the large fiscal packages passed over the last couple of years began to filter through.
(courtesy of Yardeni Research: www.yardeni.com)
The CHIPS/IRA/IIJA are large and long-term positives in the US driving lots of activity, particularly in manufacturing.
The European, British and Canadian economies, due to structural differences in the transmission mechanism of higher rates, seem to be weakening somewhat and are likely least prepared for geopolitical instability and the possibility of an oil price spike.
If events do escalate in the Middle East, the oil impacts likely run through Saudi Arabia and Iran, countries that have already seen big changes in oil production over the past year or so, for different reasons. Iranian production and exports of oil have increased as sanction enforcement seems to have been reduced some. One would assume that may reverse.
(courtesy of Yardeni Research: www.yardeni.com)
Saudi Arabia, Israel and the US were possibly, if you squint, on the cusp of some friendlier relations, which may have led to Saudi production cuts being undone. They have a lot of spare capacity currently to limit price moves in escalations but would have to choose to use it. That decision may be tough, depending on how events unfold.
(courtesy of Yardeni Research: www.yardeni.com)
A slower moving force, but important nonetheless, the US is producing oil at record levels now, but also has less in reserve.
(courtesy of Yardeni Research: www.yardeni.com)
As for energy companies, pricing of their production is set globally and companies are beholden to that price. Higher prices near term – and assuming stable demand and costs, which may be a stretch – could lead to greater profits, good for the companies