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What to expect from the recent geopolitical ructions in the Middle East
US-Iran tensions may likely hit inflation targets, economic growth, policy rates
By Metrobank Research
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The effect was swift. When the US decided to attack Iran after failed negotiations for a nuclear deal, it took mere days for oil prices to surge 10% in over-the-counter markets, with long-term US Treasury yields moving downwards amid risk-off sentiment.
The closure of the Strait of Hormuz, a major transit point for global oil trade, immediately curtailed oil shipments of 20 million barrels per day. That is 20% of the world’s oil supply.
Compared to the disruptions caused by the Russia-Ukraine war and US intervention in the Israel-Iran war and Venezuela, this latest Middle East fracas is much more serious.
Global oil prices, which, we estimate, could reach USD 120 per barrel for Brent and USD 115 per barrel for WTI, will cascade to local pump prices and lead to second-round effects. And gi
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