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The virus, the truce, the airstrike, the sanctions and the global economy

Published Monday, August 11th, 2014

These were the driving forces behind the markets last week:

Ebola: the World Health Organization declared the outbreak an international health emergency and warned that it could last months. Nigeria declared a national emergency. At the peak of the SARS virus in 1Q 2003 the DJIA lost 16% from high to low whilst Brent fell $10/bbl, a small drop by today’s standard but a fall of 28% in value that time.

Gaza: the moment talks failed to achieve an extension of the cease-fire Palestinian rockets started to fly towards Israel, triggering retaliation in the form of airstrikes across the Gaza strip. Israeli ground operations are still a factor in a conflict that has seen nearly 2,000 Palestinian and 67 Israeli casualties. Another 72-hour ceasefire has been brokered by Egypt over the weekend but tension is not expected to ease once it expires tomorrow evening.

Iraq: the ISIS march stepped up a level as actual, but small, oil supply disruptions emerged late last week. It has been contained to the Kurdish region but if it were to spread over to the main oil producing area in the South the consequences are all too obvious for oil prices. The atrocities and the slaughter of hundreds of minority Yazidis will do nothing to bring the Iraqi conflict to an end.

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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.