Sunday, October 5, 2014
The only Middle East conflict that could cause oil prices to spike – a war between Israel and Iran
Finally, the one Middle East conflict that could cause oil prices to spike – a war between Israel and Iran – is a risk that, for now, is contained by ongoing international negotiations with Iran to contain its nuclear program.
So there appear to be good reasons why global markets so far have reacted benignly to today’s geopolitical risks. What could change that?
Several scenarios come to mind. First, the Middle East turmoil could affect global markets if one or more terrorist attack were to occur in Europe or the US – a plausible development, given that several hundred Islamic State jihadists are reported to have European or US passports. Markets tend to disregard the risks of events whose probability is hard to assess but that have a major impact on confidence when they do occur. Thus, a surprise terrorist attack could unnerve global markets.
Read more at http://www.project-syndicate.org/commentary/nouriel-roubini-asks-why-global-financial-markets-remain-buoyant-in-the-face-of-mounting-geopolitical-risks#cGS9ow6GRvwQA0jd.99
Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics