Schroders expects high oil and gas prices to last longer, which may lead to rising inflation

Matthew Michael, Director of Emerging Market Bonds and Commodities Investment at Schroders, told the Economic Daily that the blockade of the Strait of Hormuz and damage to oil facilities will keep oil and gas prices at current levels for a longer time. The market is currently anticipating that the conflict in Iran will last longer, and the oil market is likely to experience a severe supply shortage, which could ultimately lead to rising inflation.

He stated that oil prices are currently hovering above $100, but the level of pain is only about half of what it was during the peak oil prices in 2007, as the current $100 is very different from the $100 in 2007 due to changes in inflation and purchasing power over time.

He added that utilizing strategic oil reserves is a correct and important decision, but logistical bottlenecks prevent it from solving the problem in the short term. Overall, he believes that global oil resources are still sufficient; the issue lies in the cost of extracting oil, the profits, and the incentives for extraction