Keep calm and carry on

THE invasion of Ukraine is not going well for Russia and, as some would suggest, is also having a bad impact on broader markets. The usual culprit is the price of oil, and of course, all the flow-on inflationary impacts. With pump prices around S$3 a litre, it seems easy to make the connection.

Markets are often more complex than newspaper headlines, or the bowser price. Take a look at a monthly chart of NYMEX oil and it quickly becomes clear that the current oil price is within the price trading band that prevailed from 2011 to 2014. Back then, petrol was only S$2.14 a litre - so there is something else other than Ukraine at play in this price spiral.

Supply chains have not recovered from Covid lockdowns, and new China lockdowns are adding to the supply chain pressure. In the US, the impact of former president Donald Trump's China tariffs is also pushing up inflation. Oil prices have contributed, but they are not the primary driver.