Tighter Iran sanctions should boost oil prices in 2020

GULF COUNTRIES - Forecast 23 Aug 2019 by Rory Fyfe and Justin Alexander

Iran sanctions will take 1m b/d off the market in 2020 and its response will increase the geopolitical risk premium. The combination of these factors should boost oil prices to an average of $65-70 in 2020. This is a slightly out-of-consensus view, as most forecasters see prices as flat or falling in 2020, driven down by weaker economic conditions and the continued US shale expansion. The expected oil price gain will be broadly supportive of GCC bond and equities markets. Saudi and Bahraini yields, however, are likely to be more sensitive to tensions with Iran which could offset the benefit from higher oil prices.

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