Fuel prices from crude to coal continue to increase across the globe, fueling concerns that the world is headed into energy-driven inflation and driving investors to seek out safe harbours.
North Sea Brent crude, an international standard for crude oil prices, momentarily hit $80 a barrel for the first time since October 2018 in London on Tuesday.
New York, U.S. West Texas Intermediate crude also hit its highest price since July. This uncertainty rattled investors Tuesday. American stocks were sold off sharply as bond yields rose, with investors trying to price in prospects of the Fed’s next move. The Dow fell 569 points, or 1.6%, after being down over 600 points at the session’s low.
Crude oil was not the only energy source sparking concern around the world. A key benchmark for coal has nearly quadrupled over the past year to a roughly 13-year high, according to sources.
The surge comes amid growing uncertainties over the energy supply across the world. Rising coal prices have forced Chinese power plants to cut output, power outages in Shanghai and Beijing are continuing.
Rising energy prices also hang over the U.S. Federal Reserve’s outlook for inflation, which Fed Chair Jay Powell has recurrently described as temporary. Robust upward pressure on consumer prices persists, and if energy costs hold solid at high levels, the Federal Reserve may have to bring forward its timetable for tapering bond purchases and raising interest rates.