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Alarming developments in Iraq

Published Wednesday, June 11th, 2014

According to the World Bank the prospects for global growth this year are much worse than they were six months ago because of what has happened in Ukraine and of the impact of cold weather in the US. As a result they have cut their global growth forecast from 3.2% to 2.8% and US growth from 2.8% to 2.1%. This does not sit at all comfortably with stock markets at record highs.

Should Ukrainian tensions worsen they see the potential damage to global growth reaching 1.4%. Had they published their report next week they would also have had some alarming events in Iraq to factor in. Warnings that fallout from the Syrian crisis would extend beyond its borders have proved correct with Iraq’s second largest city taken over by Sunni insurgents from the Islamic State of Iraq and al-Sham (ISIS).

The Iraqi Prime Minister has declared a state of emergency and appealed for international help. The US State Department warns that ISIS is a threat not just to the stability of Iraq but the entire region. The calm with which the markets are taking rising geopolitical tensions is astonishing.

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Posted by Tamas Varga

Tamas Varga has been in the oil industry since 1992 and with PVM for 18 years. During his time in the industry he has gathered a range of experience in the oil markets. At PVM Tamas is in charge of data collection and analysis.