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Oil Prices Surge Amid Syrian Turmoil

by THEFUTURE.TEAM

December 9, 2024

Oil prices kicked off the week on an upward trajectory after rebels ousted the 43-year rule of President Bashar al-Assad and his father, Hafez al-Assad. The prospect of civil war has fueled concerns over heightened tensions in the Middle East, raising the risk of supply chain disruptions.

Key Figures

Brent crude rose 0.52% to $71.49 per barrel.
US light crude climbed 0.58% to $67.59 per barrel.

These movements followed the seizure of Damascus by Hayat Tahrir al-Sham, a radical rebel group, on Sunday. This marked the end of 50 years of Assad family rule, raising fears of a possible escalation into civil war.

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The oil market’s upward trend comes after two consecutive weeks of losses for both Brent and US light crude, driven by growing expectations of oversupply in 2025.

Market Constraints

Despite the rise in prices, broader market sentiment remains weighed down by weak demand in China, the world’s second-largest economy. This prompted Saudi Aramco, the world’s top crude exporter, to slash its January 2025 prices for the Asian market to the lowest level since early 2021.

OPEC+ Strategy Shift

In a move that surprised markets, OPEC+ postponed its planned production increase for January by an entire year, rather than the previously expected three months. OPEC+ controls about 50% of global oil production, and the group had initially planned to ramp up production from October 2024. However, slowing demand, especially from China, along with rising output from other producers, forced multiple delays to the increase.

With the global energy market still under pressure from weak demand, the cartel’s decision signals a shift toward a more cautious production strategy to maintain price stability.

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AI Spending Is Complicating The Fed’s Fight Against Inflation

by News Editor

August 12, 2026

Silicon Valley leaders have long argued that artificial intelligence will make technology and services dramatically cheaper. OpenAI CEO Sam Altman has described a future where intelligence becomes extremely inexpensive, while Tesla and SpaceX CEO Elon Musk has predicted that AI and robotics will create greater abundance and drive down costs.

So far, those benefits have yet to materialise at scale. AI adoption remains relatively slow, while the enormous investment needed for data centres and AI infrastructure is putting pressure on electricity prices, supply chains and other costs. For the Federal Reserve, this creates a difficult balancing act: AI could eventually boost productivity and reduce inflation, but its current buildout is contributing to higher prices.

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OpenAI chief economist Ronnie Chatterji said AI needs to be adopted by organisations and generate measurable value before its broader economic impact becomes visible in productivity statistics.

AI Adoption Remains Uneven

Capital spending on AI infrastructure in the U.S. is expected to reach $581 billion this year, according to Goldman Sachs Research, with global investment potentially reaching $1 trillion.

Despite the scale of spending, adoption remains far from universal. A May survey by the U.S. Census Bureau found that 17% to 20% of U.S. businesses reported using AI, with adoption significantly higher among large companies.

Companies that have implemented AI at scale also highlight the challenges. Julie Averill, former CIO of Lululemon, said successful deployment requires changes in employee behaviour and trust in the technology. OpenAI has observed a similar divide: its most advanced business users deploy AI at around eight times the rate of average companies.

Why Productivity Gains May Take Time

Economists point to the limits of automation. AI can perform individual tasks effectively, but many jobs combine tasks that are difficult to automate.

Stanford professor Charles Jones refers to these as “weak links”. Radiology, for example, involves interpreting scans but also communicating with patients and working with colleagues. AI can automate part of the job without eliminating the profession itself.

As a result, the full economic impact of AI may not become clear until businesses adopt the technology more broadly and reorganise their operations around it.

AI Adds To The Fed’s Policy Challenge

AI’s economic impact has become part of the Federal Reserve’s policy debate. Fed Chairman Kevin Warsh has argued that AI could eventually become a significant disinflationary force by increasing productivity and strengthening U.S. competitiveness.

Other officials are more cautious. In July, the Fed kept interest rates at 3.5% to 3.75%, while some officials expressed concern that AI infrastructure spending could add to inflationary pressures.

Minneapolis Fed President Neel Kashkari pointed to massive data-centre investment as a new source of demand. Household electricity prices rose 10% in the two years through July, compared with a 6.2% increase in overall consumer prices. Meanwhile, shortages of chips and other AI components are pushing up costs. JPMorgan Chase estimates that DRAM prices could rise 400% by the end of 2026 compared with 2024.

Warsh has consequently adopted a more cautious tone, saying that while AI investment is laying the groundwork for future growth, the timing and scale of its economic effects remain difficult to predict.

For the Fed, the challenge is clear: AI could eventually deliver major productivity gains, but the cost of building that future is already showing up in the economy.