Geneva - The emergence of the militant group ISIS in Syria and Iraq, and recent increased efforts to fight it, has ushered in a new era of geopolitical risk in MENA. The particular nature of the ISIS organisation, the role of Syria in attracting jihadist groups globally, and ISIS's ability to amplify and feed off the other existing tensions in the region, make swift solutions unlikely.
Instead, the stage seems set for a prolonged period of heightened regional uncertainty, with risks potentially spilling over into global oil markets and also to other economies and financial markets in the region (eg, Turkey, Lebanon, Jordan and GCC). While recognising that the complexities of the issue make any predictions extremely difficult, this note is an attempt at a systematic analysis of the implications of this new ISIS threat.
Oil markets: The damage to Iraq's energy infrastructure is likely to leave a permanent scar on the survivability, resilience, and operation of the country's fragile energy sector, including by reducing expenditures on new storage and pumping needed to build production capacity and exports from the south. Our forecast for oil prices to remain above $100 in 2015 is due largely to our expectation that the threat of ISIS will keep the geopolitical risk premium elevated for 2014 and 2015. Sovereign credit: The ISIS threat adds to our concerns about the outlook for sovereign risk in the region, including Turkey's sovereign outlook and the resilience ...Den vollständigen Artikel lesen ...