NAB – The Morning Call · Stagflation consternation as OPEC sticks to the plan

Stagflation consternation as OPEC sticks to the plan

Tuesday 5th October 2021

Oil prices rose quickly this morning after OPEC+ announced they would stick with their earlier plans of rising production in November by 400 thousand barrels a day. At one stage Brent and WTI were both up more than 3 percent. NAB’s Ray Attrill says it was a surprising response, because there wasn’t a particular expectation that they would raise production. Nonetheless it has added to inflation concerns, and raised more talk about stagflation – will the price increases dampen demand and slow the jobs recovery? It’s a dilemma for central banks and governments. So far though, inflation isn’t having a big reaction on production. The manufacturing ISM in the US was strong on Friday, so was consumer spending. Markets will be watching the data today to see whether demand from the services sector is continuing to push ahead.

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