INTERNATIONAL – 2020 was supposed to be the year where the global economy bounces back to life after the US and China trade tensions thawed and investors got more clarity around Brexit. Events over the last week have undoubtedly put this outlook at risk.
The US killing of a top Iranian military commander in Iraq is not likely to stop a war as President Trump claims, instead this act could set off new conflicts in the Middle East that may have global consequences.
Over the weekend, Iraq’s parliament voted to expel US troops, Iran announced it will no longer adhere to the 2015 nuclear deal limits and three Americans were killed in Kenya in an attack on a military base by a jihadist group.
While no one knows what will happen next, investors have pushed oil above $70, up $4 since the conflict started, and gold has surged to its highest levels in more than six years.
In September, a drone attack on Saudi Arabia’s Abqaiq crude-processing plant sent Brent prices 20% higher, but those gains were rapidly reversed as production was quickly restored and markets saw it as a short-term risk event. In the current environment, it’s hard to tell whether we’ll see a larger disruption in oil supplies that could send prices much higher.