This chart comes to us via the “Polish Swish,” known for his nuttin’ but net baseline jumper. It illustrates the local pain of rising oil prices in a few selected emerging markets.
Crude oil is priced in dollars, and countries which have seen their currencies get hit this year are suffering asymmetric pain, complicating and adding to local economic and inflationary pressures. India, China, Taiwan, Chile, Turkey, Egypt and Ukraine are the emerging markets most vulnerable to $100 per bbl crude.
Oil prices have made a beeline to $75 bbl since mid-August as traders front-run the Iranian sanctions coming online in November.
The second period of sanctions will take effect from Nov. 4, after which Iran’s port operators, shipping and shipbuilding sectors will be limited.
The National Iranian Oil Company (NIOC) will also see sanctions along with petroleum-related transactions that include the purchase of petroleum, petroleum products, and petrochemical products from Iran.
Along with the impact on Iran’s energy sector, sanctions will also affect transactions between foreign financial institutions and the Central Bank of Iran.
“In addition, effective Nov. 5, 2018, the U.S. government will revoke the authorization for U.S.-owned or -controlled foreign entities to wind down certain activities with the Government of Iran,” the Treasury statement said.
The price of crude futures denominated in dollars are up almost 20 percent since mid-August and 25 percent year-to-date.