Oil: Middle East geopolitical risks highest since Gulf War – TDS

China is more relevant for oil prices crude oil than the fall of Bashar Al-Assad’s regime, says Daniel Ghali, Senior Commodities Strategist at TDS.

Power supply risks are not increasing

“The Levant is not an oil-producing region, which limits the implications for energy prices in the near term despite a significant restructuring of the geopolitical order in the Middle East. In fact, we believe that geopolitical risks in the Middle East are at their highest levels since at least the Gulf War Considering that Iran’s Axis of Resistance has been markedly reduced in recent months, the long-term implications for the nation’s nuclear policy and its impact on regional stability are not. “should be underestimated.”

“Still, our return decomposition framework suggests that energy supply risks are not increasing, in line with the limited implications for oil supplies resulting from regime change in Syria. Instead, overall demand expectations for raw materials are increasing significantly.”

“This reflects the strongest signals from the Chinese Politburo since the Global Financial Crisis, having changed policy language from signaling a ‘prudent’ monetary policy since 2011 to a ‘moderately loose’ policy for the first time since the GFC. The language on Fiscal policy also progressed from a ‘proactive’ to a ‘more proactive’ approach, underscoring the notion that China’s “whatever it takes” moment may have landed.”

Source: Fx Street

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