Rising oil prices can postpone Fed tapering

-This is the translation of  WSJ blog post that appeared on 8/28/2013

While Western intervention to Syria is now almost certain, rising oil prices due to the conflict can make Fed to postpone its decision to lower monthly 85 billion worth of asset purchases.

Is Investment ICM manager Şant Manukyan warns if the oil prices moves from 110 dollars a barrel to 140 dollars, it can be a hurdle for global growth. “This can leave Fed’s tapering out of market focus”, said Manukyan to Wall Street Journal.

During the era where Arab Spring spread to Libya and Muammer Gaddafi being ousted the Brent price has climbed from 80 dollars to 126 in just 6 months. Economist Nouriel Roubini named the rising oil prices as the biggest threat to vulnerable global growth.

Brent rising to 115 dollars, the highest levels since February and crude climbing to 110, the highest in 2 years will specially cripple energy important countries. Rising oil prices coupled with the outflow from emerging markets can derail the global recovery.

Fed already announced that it will go with easy monetary policy until US unemployment rate decreases to 6.5%. Decrease in unemployment depends on economic growth so Fed will likely to consider cutting asset purchase at a later date which will keep also help dollar stay cheap and commodity prices high.