Rating agency, Fitch, is warning that higher-than-expected oil prices in a scenario where the Middle East conflict disrupts oil supply would cause lower economic growth and higher inflation.
Low distillate inventories in the United States have tightened the diesel market during the harvest season and ahead of the winter heating season. Diesel and heating oil supply could become even tighter and pricier if U.S. manufacturing activity returns to growth soon.
Crude oil prices began Tuesday trade with a dip as traders brace up for the April inflation data, to be released on Wednesday.
For decades, the conventional wisdom in macroeconomics has been that high oil and gas prices are frequently the leading cause of high inflation. In fact, many analysts have blamed the two major oil price shocks of the 1970s for high inflation during the decade.