Nuclear War and cyber-attacks are the top manmade threats to international stability in 2018 as per World Economic Forum’s Global Risks Report. The situation could get aggravated further with Middle East instability & Oil and Gas price hikes as all these are inter-linked.
The risk of a nuclear war is imminent with North Korean Leader Kim Jong Un’s consistent testing of ballistic missiles and nuclear weapons despite strong opposition from prominent leaders of major powers across the world and US President Donald Trump’s pledge to exterminate North Korea in case of an attack. 2018 stands the highest chances to witness the economic and political frictions between major powers than any other years in the past.
This geopolitical friction is contributing to a spurt in the scale and expertness involved in the cyber-attacks. Especially, the Nuclear weapon systems of the major powers of the world like US, UK and other countries are highly vulnerable to cyber-attacks by state and non-state groups. The biggest reason for the same is the tenure during which these nuclear weapons were developed without keeping into account the potential cyber vulnerabilities that will come up in future with the advancement of computer technology. In addition, there are a few hundred million malwares being released every year and the number is just multiplying day on day. Trojans to steal data from banking platforms are easily available in the grey market for as low as $500. And, this cyber attack threat is looming large over all major sectors including nuclear weapon systems, economic system of a country and aviation industry just to name a few. The Wannacry Ransom ware attack on NHS, UK in May 2017 is a good example of the vulnerabilities of our system.
Instability in the Middle East is increasing risks to supply from key oil-producing areas. The five sensitive Crude Oil Sources — Iran, Iraq, Nigeria, Libya and Venezuela — continue to see supply disruption potential, with northern Iraq crude exports at risk due to an escalation of tensions between the (Kurdistan Regional Government), Baghdad and Turkey, while the U.S. has decertified the 2015 Iran nuclear deal in Oct 2017. Adding to these tensions, U.S. President Donald Trump last week refused to certify Iran's compliance over a nuclear deal, and a decision against Tehran is pending by the US Congress. This power struggle in the middle-east will surely have an impact on the oil supply from major oil producing countries and may contribute to international instability. To add to it is Islamic State of Iraq and Sysria(ISIS) is named as the top threat in countries mostly concentrated in Europe, the Middle East, Asia and the United States. A substantial number of these countries have endured deadly terrorist attacks claimed by the Islamic militant group. And, this threat continues to loom large.
To add to it, the world’s major oil producers have extended production cuts through to the end of 2018, in a bid to tackle a global glut of crude and keep prices soaring. Members of Opec, the oil cartel, and other major producers including Russia agreed that the curbs, which started in January 2017 and have lifted a barrel of Brent crude from $40 to more than $60 now, will continue for a further 6 months and will be reviewed in June 2018. On a macro-economic level, Oil price increases are generally thought to increase inflation and reduce economic growth. In terms of inflation, oil prices directly affect the prices of goods made with petroleum products. As mentioned above, oil prices indirectly affect costs such as transportation, manufacturing, and heating. The increase in these costs can in turn affect the prices of a variety of goods and services, as producers may pass production costs on to consumers. Oil price increases can also stifle the growth of the economy through their effect on the supply and demand for goods other than oil. Increases in oil prices can depress the supply of other goods because they increase the costs of producing them.
Although we cannot influence any of these areas as individuals but awareness around all these aspects can help us take informed decisions, plan and prepare us for any possible turmoil.
Veye Pty Ltd(ABN 58 623 120 865), holds (AFSL No. 523157 ). All information provided by Veye Pty Ltd through its website, reports, and newsletters is general financial product advice only and should not be considered a personal recommendation to buy or sell any asset or security. Before acting on the advice, you should consider whether it’s appropriate to you, in light of your objectives, financial situation, or needs. You should look at the Product Disclosure Statement or other offer document associated with the security or product before making a decision on acquiring the security or product. You can refer to our Terms & Conditions and Financial Services Guide for more information. Any recommendation contained herein may not be suitable for all investors as it does not take into account your personal financial needs or investment objectives. Although Veye takes the utmost care to ensure accuracy of the content and that the information is gathered and processed from reliable resources, we strongly recommend that you seek professional advice from your financial advisor or stockbroker before making any investment decision based on any of our recommendations. All the information we share represents our views on the date of publishing as stocks are subject to real time changes and therefore may change without notice. Please remember that investments can go up and down and past performance is not necessarily indicative of future returns. We request our readers not to interpret our reports as direct recommendations. To the extent permitted by law, Veye Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss, or data corruption) (as mentioned on the website www.veye.com.au), and confirms that the employees and/or associates of Veye Pty Ltd do not hold positions in any of the financial products covered on the website on the date of publishing reports. Veye Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services.