OCBC Warns 40% Stagflation Risk if Oil Supply Shock Lasts Over Two Quarters

OCBC cautions that the early-2025 oil supply shock, pushing benchmark crude 25% higher amid geopolitical disruptions and outages, raises stagflation odds above 40% in major economies if it persists beyond two quarters. The warning caps a week of mixed institutional views: BofA highlighted U.S. energy intensity at one-third 1970s levels, slashing a 10% oil spike's inflation impact to 25 bps (vs. 90 bps) and growth drag to 5 bps (vs. 70 bps), with 64% surveyed expecting oil above $90 for 3-6 months. Commerzbank noted 60% lower global oil use per GDP, making a 50% rise hit GDP one-third as hard, backed by 4 billion barrels in reserves, while Morgan Stanley likened the volatility—capping USO (-7.79%) and BNO (-7.36%) drops—to the early '90s Kuwait crisis.