The second half of the year rests on a delicate chain of dominoes, according to a new briefing from Oxford Economics, and whether the US-Iran peace agreement holds is the factor that determines how the rest fall.
"Its durability will determine whether the global economy gets an energy-driven disinflation tailwind or absorbs a second oil shock," stated chief global economist Ryan Sweet in the report, calling the deal "the key domino that will determine whether other risks are amplified or dampened".
The consultancy expects the global economy to accelerate, forecasting annualised growth of 3.1% in the second half against an estimated 1.6% in the first, powered chiefly by cheaper oil feeding through to household incomes, although Sweet puts the odds of reaching a durable deal at "a coin flip".
If the truce holds, Oxford Economics sees Brent crude averaging in the low $70s per barrel, easing inflation and financial conditions across emerging markets and tech valuations.
If it breaks, the consequences would not stay contained to the oil market.
