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Fed sees oil prices easing over the next 6 to 12 months
New York Fed President John Williams said energy prices can peak first, then fall over time even as renewed Middle East attacks raise supply disruption concerns.
The Federal Reserve expects energy prices, including oil, to cool over the next six to 12 months, even as renewed fighting in the Middle East revives worries about disruptions to crude flows through the Strait of Hormuz, OilPrice reports. New York Fed President John Williams said the market-implied outlook for easing oil prices remains a reasonable baseline despite the collapse of a U.S.-Iran ceasefire framework.
Williams argued that the underlying fundamentals point to energy prices being near their peak first and then coming down over time. He said higher crude costs tend to filter into prices for gasoline, diesel, jet fuel, shipping costs, and other consumer goods, making oil a key swing factor for inflation.
Oil markets have recently swung between hopes for renewed diplomacy and renewed reminders that supply risks are still present. Williams added that he would not forecast Fed policy for the July meeting, stressing that officials are data dependent and have not begun making decisions, OilPrice reports.
He also warned that if oil stays elevated long enough, the Fed could keep interest rates higher for longer, or potentially raise them again. Williams said oil markets have a history of surprising forecasters, underscoring the uncertainty tied to energy prices.
according to OilPrice reports
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