UBS On-Air: Paul Donovan Daily Audio 'Extending the “ceasefire”'
5/29/20263 min
Energy markets gave a cautious response to reports the US and Iran may extend the terms of the “ceasefire”. Key approvals are missing—US President Trump wishes to think about it, which will take a couple of days. Market caution also reflects the more muted tone from the Iranian side. Energy markets need to consider a post-war environment—how quickly production normalizes, what damage must be repaired, and what a newly empowered Iran means.
Transcript preview
First 90 secondsPaul Donovan· Host0:01
Good morning. This is Paul Donovan, Chief Economist at UBS Global Wealth Management. It's seven o'clock in the morning, London time, on Friday the twenty-ninth of May. The oil markets have seen some further decline in the futures prices on US administration officials suggesting that some kind of agreement is very close with Iran, subject to key approvals. US President Trump apparently needs to think, which will take a couple of days. However, in spite of the inherent optimism bias of markets throughout this war, there is still a limit to the current enthusiasm. The Iranian side has not sounded so positive on the outcomes and suggested that the US might not have conceded quite enough yet. Investors have learned that reports on Axios are not always entirely reliable summaries of what is actually happening. Moreover, markets, especially the oil and gas markets, need to consider the post-war environment, the speed of any normalization of future production, the extent of current war damage, and what a newly empowered Iran means for the wider Gulf region. Japan released a few key economic data points overnight. The Tokyo inflation rate for May actually slowed, both on the headline