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As oil prices climb to levels not seen since mid-2022, Global stagflation appears “almost inevitable” and investors need to ensure that their portfolios are built for resilience, a global consultancy warned on Monday.
Nigel Green, CEO of deVere Group, said in a note that escalating conflict in the Middle East is disrupting supply chains and sending shockwaves through global markets, leaving the world “facing the very real possibility of a global stagflation threat”.
“Stagflation is the toxic combination of rising inflation and slowing economic growth. Prices climb sharply while economies weaken, leaving policymakers with very few effective tools.”
As the conflict entered its second week, disruptions to tanker movements through the Strait of Hormuz and higher insurance costs due to security risks have already prompted Iraq and Kuwait to cut output, driving Brent and US. West Texas Intermediate (WTI) prices higher.
Brent crude futures were 16.7% higher at $108.20 per barrel at 0642 GMT - on track for the biggest-ever jump in a single day, while WTI crude futures were up 15.7%, at $105.13, according to the latest Reuters report.
Green added that investors need to respond decisively, as stagflation fundamentally reshapes the investment landscape.
“Portfolios must be built to withstand persistent inflation pressure while growth weakens. Energy exposure, commodities and carefully selected equities linked to real assets become increasingly important,” he added.
(Writing by Brinda Darasha; editing by Seban Scaria)
