Oil: Focus on Middle East – Westpac

Analysts at Westpac suggest that global attention remains focussed on the Middle East, particularly crude markets with oil rallying to 2014 highs, spurred by President Trump withdrawing the US from the 2015 Iran nuclear deal.

Key Quotes

“The current upswing in crude oil prices will support headline inflation globally for some time. This could be welcomed by some central banks, but it could be a long shot to expect a flow-on impact to sustained inflation and wages. Notably, US April CPI was below market expectations. The three-month annualised pace of core CPI inflation has now decelerated to 1.8%, below the FOMC’s target. Clearly for the FOMC, there is no need for urgency with policy and this is capping bond yields with US10 still holding below 3%.”