DAVOS, Switzerland — Despite the slowdown in the global economy, high crude oil prices are expected to persist this year, driven by supply shortfalls, brisk demand in dynamic Asian emerging nations and geopolitical concerns.
Top executives and experts said the continued high cost of oil is also expected to impact adversely on synthetic fibers, which are sensitive to the price of petroleum. Spiraling oil prices have also pushed freight rates sharply upward and have led many companies to revisit the proximity-to-market doctrine and where they source their supplies, including textile and apparel firms.
Senior Chinese officials have recently sounded the alarm that high energy and food prices are largely responsible for the increase in that country's inflation and calls by Chinese workers for sharp wage increases, which could put the top apparel manufacturing country at a competitive disadvantage to lower-cost producers.
"I think that on the energy side, I see relatively high prices for some time to come because we are seeing a structural imbalance between the supply and demand on the energy side," said Angel Gurria, secretary-general of the Organization for Economic Cooperation and Development, in an interview at last month's World Economic Forum meeting here.
Gurria said, "There are circumstances that suggest there are imbalances in the supply and demand equation, which is not just a speculative bubble, it's not just people trying to guess. There is a stronger pull on the demand and supply has not responded at the same speed."
Nobuo Tanaka, executive director of the International Energy Agency, said in an interview, "The current level of [oil] inventory in the consuming countries is very low. It's the lowest in the five-year average and at the same time the spare capacity in the producing countries is also very low."
Tanaka, who heads the agency consisting of 27 "rich" countries, including the U.S., said, "This creates very much volatility in the markets." He said oil-producing countries can do more and added that "at the same time, consuming countries can do more by energy efficiency and conservation."
In recent weeks, crude oil prices have been hovering between $80 and $90 a barrel and in early January breached the $100 a barrel benchmark. On Friday, world oil prices advanced toward $100 a barrel, briefly topping $96, as geopolitical jitters in places such as Nigeria and Venezuela stoked global supply concerns, even as Federal Reserve Board Chairman Ben Bernanke predicted "a period of sluggish growth" ahead for the energy-dependent U.S. economy.Also on Friday, the OPEC oil cartel lowered its projections for growth of demand this year in response to a slowdown in world economic growth, predicting demand would likely increase by 1.43 percent rather than a previous estimate of 1.52 percent.
Charles Dallara, managing director of the Institute of International Finance, said he expects a dip in commodity prices as a result of a slowdown in the U.S., the world's biggest economy. But Dallara, a former U.S. Treasury official, said he thinks agricultural commodities "are less likely to be affected by the slowdown then perhaps crude oil."
However, the scenario feared by most is geopolitical crises, especially in oil-rich nations, or a terrorist attack on key oil infrastructure or transportation choke points, sending prices to new highs.
Fred Bergsten, director of the Washington-based Peterson Institute for International Economics, told the WEF attendees, "There is concern that oil will go up to $200 [a barrel] driven by geopolitical crisis."
Daniel Yergin, chairman of Cambridge Energy Research Associates, said in an interview that his group has one scenario called "breakpoint" where the price of oil, as a result of geopolitical disruption, rises to $150 a barrel before retreating.
Taking the final spot on the mens’ portion of New York Fashion Week calendar next month will be none other than @tomford. Though he’s shown his men’s wear in New York in the past, this will mark the first time the designer has shown his men’s collection alone during New York Fashion Week: Men’s. His runway show will debut on February 6 at the Park Avenue Armory. #wwdfashion
London-based couture house @ralphandrusso has certainly been in the spotlight, having its dresses worn by @beyonce, Angelina Jolie, Meghan Markle in her engagement photos and more. For couture, Tamara Ralph focused on ornamentation — think: feathers with chain mail, jet embroidery and clusters of pearls and crystals. See the rest of the collection on WWD.com #wwdfashion #couture (📷: @giovanni_giannoni_photo)
Minnie Mouse celebrated her 90th birthday by getting her own star on the Hollywood Walk of Fame. For her celebratory luncheon, @coach’s creative director @stuartvevers dressed her in a custom made prairie dress, complete with Vever’s take on the polka dot – black sequined versions – under a cropped motorcycle jacket. The designer also put his own mark on Minnie’s classic red shoes, infusing the color with sparkles and adding some Coach crystals. “We chose colors that were very Minnie and also represented quintessential Coach elements,” said Vevers. #wwdfashion #nationalpolkadotday (📷: George Chinsee)
@nickjonas is unveiling his first-ever apparel collection through a partnership with John Varvatos. The limited-edition capsule, which makes its debut in spring, also marks the first time the designer has collaborated with anyone on a line. “The process in working with Nick is amazing. It’s inspiring to be around someone who is not only connected with the trade that they do, but also with what’s happening in the environment around him, and how that connects to what we do with style,” said Varvatos. (RG: @johnvarvatos) #wwdfashion
@margotrobbie steps out onto the red carpet wearing @miumiu. The actress is nominated for “Outstanding Performance by a Female Actor in a Leading Role” in “I, Tonya” at the #SagAwards. (📷: Stewart Cook) #wwdfashion
For @massimogiorgetti of @msgm, the Nineties are his favorite decade. “They had a huge impact on my personal growth. What I like of the Nineties is that they are not so precise in terms of style as other decades…there was actually a bit of everything,” he said. As seen on MSGM’s Spring 2018 show: tie-dye and a bit of grunge, two styles that are synonymous with the decade #wwdfashion #wwddecades (📷: @kukukuba)