According to the calendar of political events that financial institutions use to predict instability, 2015 should be a quiet year in the Gulf, the latest research study by Asiya Investments revealed.
Only two events with direct impact on the GCC are marked in red in investors’ agendas. The first one is the negotiation about Iran’s nuclear program that the country is holding with a group of six nations. An agreement was expected late in 2014, but the deadline was extended because progress was slow. The new round of negotiations started on Jan. 15.
The research study prepared by Francisco Quintana of Asiya Investments further said a political agreement should be reached by the end of March and the final agreement by the end of June. Only a couple of years ago, the prospect of reaching this deadline without a deal would have sparked a dramatic rally in oil prices. But ever since the moderate Hassan Rouhani became president in 2013’s elections, the level of tension has eased significantly and an agreement should be reachable, Asiya noted.
The second key date affecting the Gulf countries is June 5, when the 167th OPEC meeting starts in Vienna. The decision adopted there could prove to be a turning point in the trend in oil prices. Oil analysts expect prices to have started to recover by then, but if that is not the case, we might see an agreement to cut production after a year of low prices. Issues such as the ongoing instability in Yemen could bring about instability at any moment of the year.
In the rest of the world, risks concentrate in the first half of the year. January was loaded with relevant events, mostly in Europe, where the policy tone for the years to come be set in this month. As a starter, the elections in Greece will determine whether the agreement with the IMF, EU and ECB is suspended. In June and July there will be a potential rise on global tension. In addition to Iran and the OPEC, Turkey will hold its first general elections since 2013’s protests in Istanbul. Also the United Kingdom will have elections in which an anti-European Union party might obtain a large share of the seats, forcing a referendum to exit the union.
Most importantly, the United States might reach its debt ceiling around that moment. In the past, the agreement to increase the debt limit has been complicated, particularly when lower and upper houses are dominated by different parties. Towards the end of the year elections in Portugal and Spain might bring again instability to the euro zone if parties proposing debt restructuring perform well.
Potential sources of instability are abundant, but overall, the level of geopolitical tension seems to be lower than a year ago.
Concern regarding Iran, Ukraine, Russia, the countries involved in the territorial disputes in the China Sea or ISIS has come down toward the end of 2014. Elections, a traditional source of global uncertainty, are less numerous than last year: 40 percent of the world population voted in 2014, compared to less than 10 percent that will do it in 2015. However, the conflicts that truly shake the global economy are usually absent in the political calendar prepared early in the year. It is because they are unforeseeable that their impact is higher.