Potential oil price spike may scupper Asean’s easing cycle, say economists
If the cost of a barrel hits US$120, fiscal measures may do little to tamp down inflation and trade pressure, they say
[SINGAPORE] A persistent surge in oil prices may force Asean central banks to end their monetary easing cycles in the second half of 2025, said economists from OCBC in a note on Wednesday (Jun 25).
Oil prices spiked above US$77 a barrel on Jun 20 as Israel launched strikes on Iran’s nuclear facilities, and then plunged dramatically as a ceasefire was announced on Wednesday. As it stands, Brent crude oil futures have remained cheap, their prices dipping below pre-strike levels to around US$68 a barrel at 9 am GMT on Wednesday (5 pm, Singapore time).
OCBC Asean economists Lavanya Venkateswaran, Ahmad Enver and Jonathan Ng wrote that, despite the currently lower prices, the risk of oil prices spiking once more remains. They projected that in a worst-case scenario, Brent prices could hit US$120 a barrel for a month, and then retrace to US$100 for the rest of 2025.
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