Lessons from the pipeline attack; the Fed and commodities

The net impact of the recent attack on Saudi Arabia’s East-West pipeline could even feasibly result in slightly higher oil flows over time. But the bigger picture is that the oil market remains in a large deficit and the latest developments raise the risk of disruption to oil exports persisting well into next year. Meanwhile, we think that Fed rate hikes and a stronger dollar will hurt the relative attractiveness of holding gold, and contribute to prices falling over the coming months.