Lebanon fears escalate, Saudi happy with $80pb oil

The sharp widening in Lebanese dollar bond spreads this week suggests that investors are increasingly fearful that the country is lurching towards an economic crisis and, in the event of a fresh escalation of tensions with the Gulf, we think that a sovereign default would become a real possibility. Meanwhile, reports that Saudi officials are comfortable with oil prices rising above $80pb means that the Kingdom may refrain from raising oil output further.