【Oil Price Trends】Morgan Stanley: If Oil Prices Rise to $120, Asian Economies May Face Severe Risks, Several Countries May Need to Raise Rates in H2 to Combat Inflation

Morgan Stanley’s latest research report indicates that oil prices remain volatile at high levels. As the world’s largest energy importer, Asia is facing unprecedented dual pressures of imported inflation and growth slowdown. The bank warns that if oil prices rise to $120 per barrel, it could pose significant risks to Asia’s economic growth.

Quantitative analysis by Morgan Stanley shows that a $10 increase in oil prices per barrel would directly reduce Asia’s overall GDP growth by 20 to 30 basis points. If oil prices reach $120, the import burden of oil and natural gas in Asia would account for 6.3% of GDP, well above historical averages.

The bank explains that most Asian countries heavily rely on Middle Eastern oil and Qatar LNG. Ongoing disruptions in the Strait of Hormuz and Qatar’s long-term production capacity issues make high energy costs structurally inevitable.

Prolonged conflicts weaken policy buffers

Most Asian countries are already facing a dual dilemma of high inflation and slowing growth. If the energy crisis becomes prolonged, expanding fiscal deficits and increasing debt burdens will significantly reduce available policy space.

Analysts specifically point out that the Philippines, Indonesia, India, and South Korea are highly dependent on imported energy. Elevated oil prices will directly push up CPI, forcing central banks to prioritize inflation expectations. If conflicts persist, these countries may need to start raising interest rates from late Q3 or Q4, which would further increase corporate financing costs, suppress consumption and investment, and intensify downward pressure on economic growth, creating a vicious cycle.

Market Opening: Long and Short Positions

Performance periods amid Middle Eastern conflicts—Can Hong Kong stocks hold steady at 25,000? The extreme divergence of “strong oil, weak gold”—Analysis of Zijin and Sinopec earnings.