With oil markets dancing on a knife edge as the Middle East conflict ignites prices, the butterfly effect is in full force as a whisper of stimulus in Beijing could trigger a tsunami of inflation in Europe. Despite China's stimulus package potentially being the largest since the pandemic, the market’s initial jubilance has dissipated, with the underlying economic reality coming back into focus. However, all eyes are now on a follow-up announcement by the Finance Minister, with additional measures potentially reigniting Chinese oil demand, leading to significant inflationary pressures in the UK and EU.

A substantial increase in Chinese demand could exacerbate energy price pressures, forcing the central banks to maintain higher interest rates for longer. With the cost-of-living crisis still casting a long shadow, UK and EU consumers may find themselves unwitting participants in a global economic drama, where decisions made in Beijing could determine whether they can afford to heat their homes this winter.