NEW YORK – Fuel prices from crude to coal continue to rise across the world, fueling concerns the world is heading for energy-induced inflation and prompting investors to seek safe havens.
North Sea Brent crude, an international benchmark for crude oil prices, temporarily exceeded $ 80 a barrel for the first time since October 2018 in London on Tuesday. Back in New York, US West Texas Intermediate crude also hit its highest price since July.
This uncertainty shook investors on Tuesday. US stocks were sold sharply as bond yields rose as investors tried to heed expectations of the Fed’s next move. The Dow Jones Industrial Average lost 569 points, or 1.6%, after dropping more than 600 points at the session low.
Crude oil was not the only source of energy of concern in the world.
A key benchmark for coal has nearly quadrupled in the past year to a peak of around 13 years, according to market data firm Refinitiv. Natural gas futures are trading at their highest price in seven and a half years.
This increase comes amid growing uncertainties about the world’s energy supply. Rising coal prices have forced Chinese power plants to cut production, leading to blackouts in Shanghai and Beijing. Gas stations in the UK are drying up as the shortage of tanker drivers, made worse by Brexit, sparks a wave of panic buying.
Rising energy prices are also weighing on the US Federal Reserve’s inflation outlook, which Fed Chairman Jerome Powell has repeatedly called temporary. Strong upward pressure on consumer prices persists and if energy costs remain high, the Fed may have to anticipate its schedule of cutting bond purchases and raising interest rates .