Final answer:
Sharply rising oil prices most likely result in a negative supply shock, indicating reduced oil supply and increased prices, which can lead to higher production costs, slower economic growth, and inflation.
Step-by-step explanation:
Sharply rising oil prices are most likely to lead to a negative supply shock. A negative supply shock occurs when there is a sudden decrease in the supply of a commodity, in this case oil, which leads to an increase in the price. This situation is illustrated by a leftward shift in the supply curve, which moves up the demand curve, resulting in a higher equilibrium price and a lower quantity of oil. Hence, oil price hikes can elevate costs for producers, slow down economic growth, and raise prices for consumers.
An increase might slow down economic activity by raising production costs and leading to higher prices for goods and services, which could eventually translate into broader inflation. Alternatively, disruptions in oil supply, such as oil pumping issues, could trigger similar negative supply shocks.