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Russia turns the taps off

Published Tuesday, June 17th, 2014

The week got off to a cautious start as markets digested the deepening conflict in Iraq and renewed Ukrainian tensions which saw Russia cut gas supplies to the former following the passing of a debt repayment deadline. Increasingly worrying signs that Sunni insurgents continue to make significant territorial gains weighed on risk appetite and prompted the US to consider military action to support Iraq’s besieged government.  The escalation of violence has even caused US and Iranian officials to hold talks on the crisis although any military cooperation has been ruled out.

The only bright spot was to be found in the US where broadly positive economic data helped offset the downward pressure arising from geopolitical concerns. Figures pointing to a solid rise in US manufacturing output in May along with the first rise this year in homebuilder sentiment helped the country’s equities markets buck the global trend and finish slightly higher. US investors had yet another reason to cheer after Argentina’s President announced that it would honour its payments to holders of its restructured debt. However, the bullish tone was undermined by the latest IMF revision of US 2014 growth where it cut its forecast to 2% from 2.8% previously.

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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.