Unlike recent geopolitical threats in Syria and Ukraine, Iraq’s current sectarian conflict may have a lasting impact on oil markets that goes beyond short-term price action, Morgan Stanley argues.
Sustained violence in Iraq may result in several structural changes for crude oil, namely increased volatility and the return of oil into portfolios, the group said in a report on Monday.
“Recent events in Iraq may finally lift volatility and bring fund flows back to oil. We also see a catalyst to lift underpriced long-dated Brent as producer selling may abate and renewed supply concerns may bring consumers back to the market,” the report said.
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