Thoughts on the Middle East and Things to Watch Out For in 2018 – Introduction 

The Middle East region is a very important region that all traders should focus on. Sure, its currencies and stock markets are not available to many traders but the global implications of the region should not be ignored.

This year, the region has been a bit silent with no major news. The key issues this year were the naming of the new crown prince in Saudi Arabia, the decimation of ISIS in Iraq and Syria, the ongoing crisis in Yemen, and the recent move by Trump to move the country’s embassy to Jerusalem. These issues have all made the news but most traders have sort of ignored them.

One of the major reasons why the region is very important for traders is that the region has the highest deposits of crude oil. A major crisis in the region could lead to higher oil prices as the production zones, refineries, and transport routes are affected. Higher high prices could lead to higher prices of products and services. As such, the impact of the region could be severe to investors, traders and citizens of all countries.

The first major issue for the region is on the Israel and Palestine issue. Last month, the United States – which has been a key mediator – sided with the Israelis and announced a plan to move the embassy from Tel Aviv to Jerusalem. As a result, its role as a neutral mediator ended as Palestinians called for the end to negotiations unless the move is revoked.

Many countries in the region have condemned the move. Turkey’s statement was direct. By doing that, Trump crossed a red line that could lead to prolonged conflict in the region.

After the announcement, the conflict on the border escalated. In the U.S, a young man detonated a bomb because of the move.

Therefore, this issue could lead to war or great destabilization in the region.

The second issue is on Iran. Two months ago, Trump moved to declassify the country in his bid to end the Obama-era Iran deal. This move is consequential for three reasons. First, it was negotiated among the major global powers including China, Russia, and the EU. If America exits the deal, Iran could come back to developing nuclear weapons. Second, by ending the deal, Trump made it difficult for him to negotiate a deal with North Korea or any other country. Third, by ending the deal, America could continue to isolate itself. Already, Iran has stopped selling its oil to china in US dollar.

The third issue that could play out in the Middle East is on Saudi Arabia. Recently, the new crown prince arrested several people who are very powerful in the country. For example, Prince Al Waleed is among the 50 richest men in the world.

The arrests – or purge – was as a result of the country’s increased corruption levels and the prince’s need to raise money to fund the development of the country.

Some analysts have argued that the purge had more to do than fight corruption. Essentially, the purge was a way for the prince to fight his opposition. For example, it was revealed that the prince was the one who bought the $450 million painting. All this could lead to a more complicated crisis in the region.

Thoughts on the Middle East and Things to Watch Out For in 2018 – Useful links

 

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