Economist: US-Iran Agreement Reduces Recession Risk, But Does Not Alter Outlook

Odaily Odaily reports that Ben May and Bridget Payne of Oxford Economics stated in a report that, despite potential future setbacks, the US-Iran agreement reduces the risk of a sustained decline in oil inventories eventually triggering a surge in global energy prices, which could lead to an economic recession. However, they noted that this does not automatically mean oil flows through the Strait of Hormuz will increase faster than previously expected. "We had already assumed that shipping through the Strait of Hormuz would resume by the end of July."

"Nevertheless, our current short-term oil price forecasts still appear to be on the high side." They added that while the reopening of the Strait of Hormuz is likely to help lower inflation, its boost to economic growth is limited. Therefore, this news further reinforces their view that the Federal Reserve and the Bank of England will not raise interest rates, and other central banks that have already completed rate hikes will not raise them again. (Jin Shi)