[June 14, 2019]

KBRA Releases Research - Update on Geopolitics and Oil: The Great Disruptors

Kroll Bond Rating Agency (KBRA) releases its Update on Geopolitics and Oil: The Great Disruptors research report, in response to rising geopolitical risks. This latest addition to our expanding Energy and Sovereigns coverage provides KBRA's opinion on the main disruptors to global oil supply and demand.

At the top of this list is the U.S., due to its growing supply and the international leverage it enjoys. This discussion includes countries with extreme domestic political risk (Nigeria and Libya) as well as those which could be incredibly disruptive to the oil markets should their resource potential be realized, namely Venezuela and Iran. The report also highlights the destabilizing security events in the Strait of Hormuz. This report is a follow-up to earlier KBRA research on oil-sector performance that highlights our expectation for continued price volatility in the near term.

The main takeaways from this report include:

• The U.S. is a powerful disruptor due to its size, its growing oil production, and the role of the U.S. dollar.
• Libya and Nigeria represent the biggest oil market disruptors in terms of domestic political risk.
• Iranian and Venezuelan oil production will continue to fall over the near to medium term.
• Security events in Strait of Hormuz are likely to rise.
• Global demand is slackening, accelerated by heightened trade conflict. KBRA expects further downward revisions to global growth and we are concerned about China's growth outlook, in the context of its heavy indebtedness.

Related Publications: (available at www.kbra.com)