Compared to our base-guesstimate, risks that the conflict in the Middle East could either escalate or persist have increased lately. Neither US-Israel nor Iran seems willing to back down, while the Strait of Hormuz is effectively closed. Given that risks surrounding our macro baseline are mounting, in this note we present two high-level alternative macro and markets scenarios based on the assumption that both energy- and non-energy commodity prices remain at current levels for the next three months. A word of warning. The aim of this exercise is to provide tentative macro and market scenarios. At this stage, given time constraints, the level of accuracy is, for obvious reasons, limited. As the situation becomes clearer (hopefully) and time passes, we will fine-tune our views and mark-to-market our current working macro baseline.
RISKS ON THE RISE
Compared to our base-guesstimate, risks that the conflict in the Middle East could either escalate or persist have increased lately. Neither the US-Israel nor Iran seems willing to back down, while the Strait of Hormuz is effectively closed.
The tensions have quickly spread across the energy commodity markets. Brent crude oil futures prices have surged above USD100 per barrel, while gas prices in Europe have risen to 52 €/MWh. But that is not all. Although these developments are not all directly related to tensions in the Middle East, other commodity prices, including aluminium, copper and steel have also been on an upward trend. Last, but not least, there’s food: fertiliser prices are also on the rise.
Fabio Fois
Head of Investment Research & Advisory
Chiara Cremonesi
Senior Rates Strategist
Investment Research
Cosimo Recchia
Senior Equity Strategist
Investment Research
Francesco Ponzano
Junior Equity Strategist
Investment Research
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