21st May 2018
Oil hits $80 a barrel for first time in four years
This week we’ve seen a significant jump in the oil price, no doubt to accommodate the production of souvenir plates and tabloid pull outs for the royal wedding. Lower than expected US oil production might also be part of the picture.
The development makes life especially difficult for the Bank of England, which backed down from a widely expected rate hike in May on the back of weaker economic data. An increase in inflation from the higher oil price will no doubt put that decision under increased scrutiny.
Elsewhere, there has been deadlock in Italy as the country’s two main populist parties, consisting mostly of outsiders and amateurs from a politics standpoint, struggle to agree on a coalition deal. In a similar vein, the UK cabinet have finally agreed on what they want from a customs arrangement with the EU. At the risk of being labelled a “remoaner”, we think that might have made a better opening move than a closing one. We hope the government can now do a better job of negotiating with the EU than it has with itself.