According to Danske Bank analysts, the situation in the Middle East continues to remain tense after the attack on Saudi oil fields over the weekend.
“Yesterday, Saudi Arabia said preliminary findings showed that Iranian weapons were used in the attacks but stopped short of directly blaming the Iranian Islamic Republic. We expect the situation to continue to remain tense, which in combination with the production cuts in Saudi Arabia will keep the oil price at an elevated level. While Trump yesterday stated he would not go to war with Iran, we have looked at what the consequences could be. The oil price would surge to as high as USD150 per barrel, which would throw the world economy into a recession.”
“Today the UK Supreme Court hearing on whether Prime Minister Boris Johnson’s prorogation of Parliament was unlawful begins (it is not clear whether the ruling will also be on Tuesday). In our view, the ruling will not be a game changer for Brexit.”
“On the data front we get the German ZEW indicator . It has fallen steeply in recent months to a seven-year low following the escalation of the US-China trade war.”
“US industrial production will be out in the afternoon. US manufacturing has been in recession for some months and we expect the data to continue to point to a mild manufacturing recession.”