Commodities Focus: Inflation Reduction Act and its Implications for Oil

Natasha Kaneva and Ted Hall discuss the proposed Inflation Reduction Act and the recent sell-off in the commodities market. On Wednesday, Sen. Chuck Schumer and Sen. Joe Manchin unveiled the Inflation Reduction Act of 2022—a $739 billion revenue-and-spending deal aimed at lowering carbon emissions and curbing healthcare costs. If approved, this would be the biggest federal investment in clean energy ever made in the US. And, despite financial markets trying to price in a recession, crude oil prices have moved in the direction of our base case forecast. Crucially, neither our oil demand estimates nor our price forecasts established in mid-March envisioned a recession. While we do not believe the risk of recession is priced in the oil price yet, that risk is growing.

 

This podcast was recorded on Friday 29th July 2022.

This communication is provided for information purposes only. Institutional clients can view the related report at www.jpmm.com/research/content/GPS-4158963-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2022 JPMorgan Chase & Co. All rights reserved.