Petroleum-related stocks such as INPEX updated year-to-date highs due to crude oil outlook, and there are concerns that “bad yen depreciation” will return

The rise in crude oil prices and outlook are also having an impact on the Japanese stock market. Stock prices of petroleum-related stocks have been boosted in the short term, but there also seem to be concerns that “bad depreciation of the yen,” which has a strong impression of high prices, will return in the long run.

1. The beginning was Saudi Arabia's extension of production cuts
The origin of the rise in crude oil prices is that Saudi Arabia announced on the 5th that it would extend the current voluntary production cut of 1 million barrels of crude oil per day by 3 months until December, and Russia also agreed that it would reduce export volume by 300,000 barrels until the end of the year. In response to this, OPEC announced on the 12th that the global oil market will run out of supply of about 3 million barrels per day for the October-12 fiscal year. On the 13th, the International Energy Agency (IEA)Significant supply shortages will occur, and there is a risk that price fluctuations will increase again”, it warned, and WTI futures temporarily added 89.64 dollars for the first time in about 10 months.

3. There are also concerns that a “bad depreciation of the yen” will return in the long run
What is the outlook for crude oil pricesLong-term bad news for both Japan and the US from a macro perspectiveIt has been pointed out that it will be
Bloomberg on the 13th is”The rise in crude oil prices is throwing a stone into the story of the soft landing of the US economyA comment by JP Morgan Asset Management strategist David Leibovitz was posted. He said that the trend in crude oil prices said, “There is a tense relationship between the growth story and the inflation story. (The work of the FRB) has become infinitely more difficult due to this movement (in crude oil prices),” he pointed out.

The rise in crude oil prices is also bad news for the Japanese economy.It will lead to a deterioration in the trade balance, and combined with concerns that interest rates in the US will remain high, pressure to depreciate the yen intensifiesThat is expected.
The foreign exchange market on the 6th showed the strength of influence of rising crude oil prices. Despite the fact that Treasurer Masato Kanda made a statement to fight back against the depreciation of the yen, yen buying remained a temporary move due to high crude oil prices. The Nihon Keizai Shimbun of the same date introduced comments that “trade deficits tend to progress until crude oil prices settle down, and are perceived as dollar buying pressure” (chief market strategist at Aozora Bank) and “the risk of yen depreciation and dollar appreciation progressing beyond 1 dollar = 150 yen is smoldering” (Chief Investment Officer Aoki Aoki of UBS SUMi TRUST Wealth Management).

The depreciation of the yen accompanied by higher crude oil prices has a stronger impact on price increases, and it is easy to be perceived as a “bad depreciation of the yen”. The true meaning of the statement made by the Yomiuri Shimbun in an interview with Bank of Japan Governor Ueda Kazuo on the 6th (published on the 9th) is “I don't think it indicates that the possibility of an early interest rate hike has increased, but there is a possibility that they were somewhat aware of the fight against depreciation of the yen” (Mr. Nobuhide Kiuchi, former Bank of Japan deliberation committee member and executive economist at the Nomura Research Institute), etc., and the fight against the depreciation of the yen has become a major issue for the government and the Bank of Japan. “With the appointment of Governor Ueda and the flexibility of YCC (yield curve control), it is now possible for the government and the Bank of Japan to fight back against depreciation of the yen while cooperating more” (same), if the “bad depreciation of the yen” due to rising crude oil prices progresses, the possibility that the Bank of Japan will move apparently cannot be said to be zero.

Source: Bloomberg, Nihon Keizai Shimbun, Nomura Research Institute column “Kiuchi Nobuhide's Global Economy & Policy Insight”, moomoo