In this “Fireside Chat,” Gavyn Davies, Founder and Executive Chairman and Andy Bevan, Partner and Economic Advisor, discuss the following:
- The volatile and tragic circumstances in Iran and the Gulf region are evolving from day-to-day
- The war invites comparison with past disruptions to oil supply – the recent increase in the price of oil is relatively limited so far
- The outlook for the price of oil will depend on the scale of disruption and how long the conflict lasts but energy futures markets are pricing a relatively benign outlook
- Asia is most directly vulnerable to shortages of physical supply through the Strait of Hormuz
- Based on the current oil price, our models imply an increase in headline inflation of 0.3% in the G4 economies by the end of the year and a drop in real GDP growth of 0.5%
- The impacts would be far higher in a scenario of $100 per barrel or more
- Asset prices in the major markets have not shown very large moves but risk is skewed in a bad direction
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