Oil price drop, Lebanon default risk, failed Saudi attacks

The fall in oil prices on the back of fears about the coronavirus outbreak in China doesn’t pose a significant threat to Gulf economies, but it has raised the chances of deeper OPEC+ oil production cuts. A default in Lebanon is now almost entirely priced into markets and, while the passing of the 2020 budget may help to secure external financing, the window to do so is closing quickly, raising the risk of a disorderly crisis. Elsewhere, Wednesday’s failed attacks on key infrastructure in Saudi Arabia highlights geopolitical risks in the region remain elevated and are a major risk to the economic outlook.