Surge in Oil Prices Toward $100 Could Elevate U.S. Inflation
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 3 days ago
0mins
Should l Buy CL?
Source: Yahoo Finance
- Inflation Impact from Oil: Analysts at Barclays indicate that if oil prices reach $100, U.S. headline inflation is likely to rise in the near term, with a sustained 10% increase in crude oil potentially adding about 0.2 percentage points to CPI, primarily through higher gasoline prices.
- Core Inflation Lag: While rising oil prices significantly impact headline inflation, the pass-through to core inflation is expected to be smaller and slower, as energy price shocks typically affect headline prices more directly than underlying inflation metrics.
- Gasoline Price Dominance: Barclays emphasizes that consumer inflation is more influenced by gasoline prices than crude oil prices, as crude accounts for only about half of the final retail gasoline price, with refining and distribution costs making up the rest; gasoline prices usually reflect 50-60% of crude price changes.
- Softer Macro Backdrop: Unlike the oil spike following the Russia-Ukraine conflict in 2022, the current macroeconomic environment in the U.S. is softer, characterized by cooling consumer spending and more slack in the labor market, with inflation data coming in weaker than expected in 11 of the past 12 months.
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Analyst Views on CL
Wall Street analysts forecast CL stock price to fall
15 Analyst Rating
10 Buy
4 Hold
1 Sell
Moderate Buy
Current: 93.000
Low
77.00
Averages
87.79
High
95.00
Current: 93.000
Low
77.00
Averages
87.79
High
95.00
About CL
Colgate-Palmolive Company is a growth company. It is focused on Oral Care, Personal Care, Home Care and Pet Nutrition, it sells its products under brands, such as Colgate, Palmolive, elmex, hello, meridol, Sorriso, Tom's of Maine, EltaMD, Filorga, Irish Spring, Lady Speed Stick, PCA SKIN, Protex, Sanex, Softsoap, Speed Stick, Ajax, Axion, Fabuloso, Murphy, Soupline and Suavitel, as well as Hill's Science Diet and Hill's Prescription Diet. Its Oral, Personal and Home Care product segment is managed geographically in five segments, such as North America, Latin America, Europe, Asia Pacific and Africa/Eurasia, all of which sell primarily to a variety of traditional and e-commerce retailers, wholesalers, distributors, dentists and skin health professionals. Its Pet Nutrition products include specialty pet nutrition products manufactured and marketed by Hill's Pet Nutrition. The customers for Pet Nutrition products are authorized pet supply retailers, veterinarians and e-commerce retailers.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Inflation and Fiscal Strain: The Philippines is at significant risk due to the high weight of fuel in its consumer price index and limited policy buffers, while Indonesia and Malaysia use extensive fuel subsidies to cushion consumer impacts, albeit at a steep fiscal cost.
- Deteriorating External Balances: Net energy importers are likely to see their current accounts worsen due to the oil shock, with the Philippines being the most exposed due to its structural trade deficit, while Thailand faces similar external pressures from rising energy import costs.
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- Escalating Middle East Conflict: As the US and Israel continue bombing Iran, retaliatory strikes by Iran on neighboring countries have pushed global crude oil prices toward $95 a barrel, highlighting the direct impact of geopolitical tensions on energy markets.
- Military Trust Issues: Trump's warning of 'we will remember' implies that the US may view the UK's hesitation as a breach of military trust, potentially complicating future defense procurement decisions and increasing uncertainty in bilateral cooperation.
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Surge in Oil Prices Toward $100 Could Elevate U.S. Inflation
- Inflation Impact from Oil: Analysts at Barclays indicate that if oil prices reach $100, U.S. headline inflation is likely to rise in the near term, with a sustained 10% increase in crude oil potentially adding about 0.2 percentage points to CPI, primarily through higher gasoline prices.
- Core Inflation Lag: While rising oil prices significantly impact headline inflation, the pass-through to core inflation is expected to be smaller and slower, as energy price shocks typically affect headline prices more directly than underlying inflation metrics.
- Gasoline Price Dominance: Barclays emphasizes that consumer inflation is more influenced by gasoline prices than crude oil prices, as crude accounts for only about half of the final retail gasoline price, with refining and distribution costs making up the rest; gasoline prices usually reflect 50-60% of crude price changes.
- Softer Macro Backdrop: Unlike the oil spike following the Russia-Ukraine conflict in 2022, the current macroeconomic environment in the U.S. is softer, characterized by cooling consumer spending and more slack in the labor market, with inflation data coming in weaker than expected in 11 of the past 12 months.
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- Technical Analysis Tool: Comparing the latest share price to the 200-day moving average can provide valuable insights for investors, aiding in market trend assessment and timing of trades.
- ETF Unit Trading Mechanism: ETFs trade like stocks, where investors buy and sell 'units' that can be created or destroyed based on demand, impacting liquidity and market performance.
- Inflows and Outflows Monitoring: Weekly monitoring of changes in shares outstanding helps identify significant inflows (new units created) or outflows (old units destroyed), directly affecting the buying and selling of the underlying assets held within the ETF.
See More
Jefferies Warns of Oil Price Pressure on ASEAN Economies
- ASEAN Economic Vulnerability: Jefferies analysts warn that the prolonged high oil price environment is pressuring ASEAN economies, with Thailand and the Philippines being particularly vulnerable due to their heavy reliance on energy imports, potentially widening trade deficits and intensifying inflation.
- Inflation and Fiscal Strain: The Philippines is at significant risk due to the high weight of fuel in its consumer price index and limited policy buffers, while Indonesia and Malaysia use extensive fuel subsidies to cushion consumer impacts, albeit at a steep fiscal cost.
- Deteriorating External Balances: Net energy importers are likely to see their current accounts worsen due to the oil shock, with the Philippines being the most exposed due to its structural trade deficit, while Thailand faces similar external pressures from rising energy import costs.
- Investment Strategy Adjustment: Analysts recommend that investors remain cautious in energy-sensitive sectors, favoring markets like Malaysia, where the currency and equity markets often provide a natural hedge against rising crude prices.
See More
China-U.S. Relations at a Critical Juncture
- Outlook for U.S.-China Relations: Wang Yi indicated during the National People's Congress that despite escalating U.S.-Israeli conflicts, 2026 could still be a landmark year for U.S.-China relations, emphasizing the need for both powers to manage risks to ensure stable bilateral growth.
- Energy Price Fluctuations: The ongoing Middle East conflict has pushed global energy prices toward $95 a barrel, complicating the fragile economic truce between the U.S. and China, especially after the U.S. Supreme Court's decision to strike down a key tariff regime, introducing new legal uncertainties into trade negotiations.
- Upcoming Summit: Top trade officials from both nations are set to meet in Paris, where they are expected to lay the groundwork for a new agreement that reportedly includes a massive deal for nearly 500 Boeing jets, which is critical for China to maintain a steady relationship with the U.S. amid its lowest economic growth target in decades.
- Strategic Competition vs. Commercial Cooperation: Wang Yi's call for
See More
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- Strained US-UK Relations: Trump rebukes UK Prime Minister Keir Starmer's potential deployment of two Royal Navy aircraft carriers, suggesting this late support could exacerbate tensions in the 'Special Relationship' and impact future military cooperation.
- Escalating Middle East Conflict: As the US and Israel continue bombing Iran, retaliatory strikes by Iran on neighboring countries have pushed global crude oil prices toward $95 a barrel, highlighting the direct impact of geopolitical tensions on energy markets.
- Military Trust Issues: Trump's warning of 'we will remember' implies that the US may view the UK's hesitation as a breach of military trust, potentially complicating future defense procurement decisions and increasing uncertainty in bilateral cooperation.
- Economic Challenges: Amid rising inflation and high energy prices, the UK economy faces significant pressure, with investors closely watching whether Starmer will proceed with the carrier deployment or if Trump's public criticism will force a strategic pivot in London's military stance.
See More
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- Inflation Impact from Oil: Analysts at Barclays indicate that if oil prices reach $100, U.S. headline inflation is likely to rise in the near term, with a sustained 10% increase in crude oil potentially adding about 0.2 percentage points to CPI, primarily through higher gasoline prices.
- Core Inflation Lag: While rising oil prices significantly impact headline inflation, the pass-through to core inflation is expected to be smaller and slower, as energy price shocks typically affect headline prices more directly than underlying inflation metrics.
- Gasoline Price Dominance: Barclays emphasizes that consumer inflation is more influenced by gasoline prices than crude oil prices, as crude accounts for only about half of the final retail gasoline price, with refining and distribution costs making up the rest; gasoline prices usually reflect 50-60% of crude price changes.
- Softer Macro Backdrop: Unlike the oil spike following the Russia-Ukraine conflict in 2022, the current macroeconomic environment in the U.S. is softer, characterized by cooling consumer spending and more slack in the labor market, with inflation data coming in weaker than expected in 11 of the past 12 months.
See More
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- Strategic Optimization Drives Growth: Companies in the consumer staples sector are leveraging strategic optimization initiatives to focus on higher-growth, higher-return categories, particularly in e-commerce and health-focused innovations, thereby enhancing their competitive positioning.
- Stable Demand Supports Industry: Despite shifting consumer spending patterns, the stable demand for essential products ensures resilience in the industry, providing companies with a consistent revenue stream from core offerings.
- Cost Pressures Impact Margins: Rising costs in raw materials, labor, and transportation are squeezing profit margins, prompting many firms to implement restructuring and cost-cutting strategies to improve operational efficiency in response to these challenges.
- Optimistic Industry Outlook: The Zacks Consumer Products industry ranks 74th, placing it in the top 31% of industries, indicating a positive earnings outlook, although the sector has underperformed the broader market in the past six months, it still holds potential for future growth.
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