Economic Impact of Surging Oil Prices

WealthCoffee · 2026-03-15T04:25:57+00:00

The rapid rise in international oil prices has a significant impact on the economy, which is mainly reflected in the intensified divergence between upstream and downstream inflation. International oil prices lead domestic crude oil extraction PPI, and after approximately two weeks of transmission effects, influence petroleum refining and related industrial chains, forming a typical oil price transmission pathway.

WealthCoffee

2026-03-15 04:25:57

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Recently, international oil prices have surged rapidly. Besides the mainstream market focus on inflation issues, what is the full picture of oil prices’ impact on the economy?

Inflation Impact: Upstream and downstream prices may diverge further

From historical experience, the impact of international oil prices on the domestic petrochemical industry chain’s PPI follows a “upstream-middle-downstream” transmission mechanism, with a lag of about half a month. Based on input-output tables, the oil-related industry chain can be outlined, which is the petrochemical industry chain. Looking at the relative price change patterns, there are indeed typical oil price transmission paths. Specifically, international oil prices lead the domestic oil extraction industry’s PPI by about half a month, reflecting transportation delays and other factors; the PPI of the oil extraction industry influences the PPI of the oil processing industry, which in turn affects chemical products, rubber, plastics, and other PPIs, with transmission occurring roughly simultaneously.

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