Brent crude is making another break for the heavens, bringing renewed worries about a supply shock in its trail. But for asset allocators, the effect of rising oil is not straightforward. They might be better advised to watch agricultural prices instead.

Since the credit crisis, the read through from oil to asset allocation has been almost perfect: stocks beat bonds when oil goes up, and lose to bonds when oil goes down. That relationship appears recently to be weakening.

That is because the economic impact of oil price rises is historically discontinuous. Absolute Strategy Research shows that 50 per cent year-on-year oil price rises do not necessarily prompt economic contractions. As for markets, ING Investment Management lists five oil shocks in the past 40 years; stock earnings multiples fell in three of them, but rose during the other two.