Estimates of the amount that the tensions between the West and Iran have added to global oil prices range from $5 to $25 per barrel (pb). Our best guess is towards the bottom of this range – perhaps $10 – which explains around half the $20 increase in the cost of Brent since December. The other $10 mainly reflects growing optimism about the prospects for the global economy. Whatever the precise split, though, oil prices are likely to fall as fears over Iran ease and the economic recovery disappoints.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services