LONDON — Following the United States’s assassination of Iranian Quds Force commander Qassem Soleimani and Iran’s initial retaliation against two Iraqi bases housing U.S. troops, financial markets moved into risk-off mode: oil prices CL.1, +0.73% spiked by 10%, U.S. SPX, +0.19% and global equities GDOW, -0.05% dropped by a few percentage points, and safe-haven bond yields TMUBMUSD10Y, +0.35% fell.
Moreover, the U.S. itself is now a major energy producer, inflation expectations are much lower than in past decades, and there is little risk of central banks hiking interest rates following an oil-price shock.Status quo won’t return Even if the risk of a full-scale war may seem low, there is no reason to believe that U.S.-Iranian relations will return to the status quo ante. The idea that a zero-casualty strike on two Iraqi bases has satisfied Iran’s need to retaliate is simply naive.
Overall, U.S. private spending and growth would slow, as would growth in all of the major net-oil-importing economies, including Japan, China, India, South Korea, Turkey, and most European countries. The price of oil can spike much more than a basic supply-demand model would suggest, because many oil-dependent sectors and countries will engage in precautionary stockpiling. The risk that Iran could attack oil-production facilities or disrupt major shipping routes creates a “fear premium.”
And this is the article that made me unfollow . Promulgating a cold war with the angle that protest/gay killing, plane shooting down maniacs are in the right? Sad time for American media.
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