First, oil was rising because of additional demand from economies feeding growth. This was good for industrial mineral producers. Then oil rose because of supply disruptions. This is bad as it harms global economic growth because high energy cost makes business expansion risky.
And if the price per barrel rises too high, even traditional winners such as oil producers and drilling mineral miners will feel the pain, with businesses downsizing or going bust because they are unable to pay for energy.
“Higher oil prices can easily damage business and consumer confidence via both an immediate hit to real incomes and the uncertainty generated over future real income (will oil prices stay at the new higher level or, worse, will they go up even further?) As a result, activity weakens even further,” HSBC chief economist Stephen King said.
HSBC added that previous sharp rises...