Analyst: Soaring Oil Prices May Trigger Sell-off in U.S. Assets

Odaily News Rising crude oil prices are a headache for overseas importers, but they may pass the pain onto U.S. assets. Following the U.S.-Israel attack on Iran, the cost of importing oil globally has increased, while the currencies of most major economies have been hit against the U.S. dollar. This double whammy creates a scenario where, as the dollar strengthens and oil prices surge, overseas nations and companies, in order to pay for suddenly much more expensive oil, may ultimately be forced to sell off their holdings of U.S. stocks and bonds. This is a risk worth monitoring, especially against the backdrop of growing holdings of U.S. markets by foreign nations and governments. Brigid Kurana, a portfolio manager at Wellington Management, stated that so far, foreign investors have not needed to liquidate U.S. assets to finance higher energy costs. However, if oil prices remain persistently high, these countries (such as Japan and South Korea) may need to reduce their holdings of U.S. equities and bonds to raise funds for energy imports. (Jin10)