Cramer Sees Inflation Relief Only If Oil Hits $40; Brent Around $92

Jim Cramer, the CNBC host, argued that $40 crude together with price cuts by retailers would send US inflation down sharply. Brent crude would have to shed roughly 56% from Tuesday's level for that to happen.

The Consumer Price Index (CPI) rose 0.4% in October, above the 0.3% that economists had expected, after Brent advanced more than 15% during the month. That leaves the door open for another Federal Reserve rate hike, a concern for Bitcoin (BTC) and other risk assets.

Could Cheaper Oil Genuinely Cool Inflation?

On Tuesday's Mad Money, Cramer said oil prices feed into food, recreation and motor vehicle insurance costs.

He referenced a chart of Valero, a US oil refiner, as an indication of $40 crude. But the view also relies on Walmart and Costco compelling suppliers to accept lower prices.

“you’re going to see the CPI come down and come down hard.”

Jim Cramer, who presents CNBC's Mad Money, made the comment in a broadcast.

Brent dropped to around $92 on Tuesday as Trump stopped short of striking Iran. Oil had earlier fallen on a reported US-Iran deal over Hormuz, but a resumption of tensions could undo that decline.

TradingEconomics data show Brent up more than 15% in October, while OilPrice had it roughly 60% higher for the year in late September. By contrast, a retreat to $40 would erase that gain and go further.

Could Oil by Itself Alter the Fed's Course?

Even so, CBS data put October headline CPI at 0.4%, while Morningstar reported core CPI — which excludes food and energy — up 0.3%.

Fed Governor Christopher Waller, notably, indicated that a 0.3% core reading would lead him to weigh a half-point rate increase in December.

Dallas Fed President Lorie Logan separately pushed for at least two more quarter-point hikes.

The data triggered about $200 million in crypto position liquidations, and Bitcoin fell.

The Fed will meet on Dec. 8 and 9, one day before the November CPI release. Any relief from oil prices would therefore show up in the data only after the Fed's decision, leaving risk assets to face the rate call first.