The oil market was rocked by two political shocks in the past week: an exchange of missiles between Israel and Hezbollah and a crisis in Libya, which led to cuts to its oil output. At the margin, the loss of Libyan supply could give other OPEC+ members more space to raise their own output come October. Elsewhere, the Central Bank of Egypt is set to leave rates unchanged next week, but attention will quickly turn to the timing of the first rate cut. We suspect this will come in Q1 of next year, which is a little later than most expect. But the overall scale of the easing cycle next year is likely to be larger than is widely anticipated.
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