This is the first edition of a new monthly publication, Energy Watch, which marks the next stage in the development of our Commodity service. This edition focuses on global oil prices and specifically on the impact of the Iran crisis, but the coverage will vary and widen over time. Next month, for example, Energy Watch will include commentary on the Brent-WTI spread and on natural gas prices.
The bulk of the rise in oil prices from October still reflects increased optimism about the prospects for the global economy and as such is relatively benign. But the increasing Iran premium is an additional headwind that Europe in particular could do without. We therefore continue to expect oil prices to drop back sharply this year as weakening demand more than offsets concerns over Iran, which are likely to fade too. An early release of stocks by the IEA (or the US acting alone) should also help to drive prices down.
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