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The implications of restored Saudi-Iran ties

The restoration of diplomatic ties between Saudi Arabia and Iran adds to signs that geopolitical tensions in the Middle East are easing, which may help to reduce risk premia in financial assets in the region as well as the oil market. Tensions will not completely disappear, however, and China’s role in brokering the agreement highlights again that Saudi appears to be turning towards Beijing and away from the West. A revival of Iran’s nuclear deal would be needed to have a material impact on the oil market, but there is still a long way to go on that front.

In view of the wider interest, we are also sending this MENA Economics Update to clients of our Energy service.

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