Spike in oil prices couldn’t come at worse time for a slowing world economy

The record oil price surge after a drone strike on a Saudi Arabian oil facility couldn’t come at a worse time for a world economy already in the grip of a deepening downturn.

While the severity will depend on how long the price spike endures, the development will further erode business and consumer confidence that already are fragile amid the US-China trade dispute and slowing global demand. A manufacturing slump around the world is hammering growth in export powerhouses China and Germany.

“A negative supply shock like this, when global growth is in a synchronized slowdown with many geopolitical hotspots simmering, is just what we don’t need,” said Rob Subbaraman, head of global macro research at Nomura Holdings Inc. in Singapore.