While we in the UK remain Brexit-obsessed, global risks are rising, most recently the risk of Middle East conflict, with global implications. This might be the final straw which opens the trap door to somewhat lower stock market prices – or just another chipping away at a wobbly edifice. Time will tell. For now, here is our take on recent events.

The drone attack last week again highlights what a dangerous adversary is Iran, which we have also covered off in the context of cyber attack risks. This is not just an attack on Saudi Arabia but on a vulnerable global oil market – in fact on a vulnerable Western world, full stop – and the Iranians know that.

The attack on Saudi Arabia did not come out of the blue, nor was it because President Trump withdraw from the nuclear deal. The recent drone attack has some long historical legs. It goes back to the fall of the Shah of Iran in 1979, and the taking of the 52 American hostages.

More recently it includes the world’s first cyber war (when the US and Israel attacked Iran with the Stuxnet virus in 2009, see “Zero Days”). The resulting expansion of Iran’s cyber army means it can now paralyse the Saudi infrastructure if it wishes. It hacked Aramco in 2012 and left a burning American flag on their system.

More recently still, in 2016 the Saudi’s Crown Prince Mohammed ordered the execution of Shia spiritual leader Nimr al-Nimr for “promoting sectarian strife”. Iran vowed to destroy the Saudi dynasty. The drone attack is not a one-off.

According to The Times 6 days ago, specifically on UK vulnerability:

“Recent Iranian incursions include a suspected effort to sabotage electricity supplies with a thwarted attack on the partner company of a big electricity provider in Britain”.

Remember the lights going out across disparate parts of the UK a few weeks ago? As we said at the time, hmmm.

Saudi Arabia is undoubtedly very exposed, despite all of its expensive build-up of US weaponry. Some 50% of the country’s gross domestic product and 70% of its export earnings depend on oil. But it is a much bigger issue. 20% of the world’s oil supplies pass through the Gulf every day.

Trump can tweet “plenty of oil”, but this is a global problem, and the world is currently on an economic (if not also political) knife-edge – as are markets.

Someone has tapped the oil barometer and it has jumped sharply – pressure is rising, storms ahead.

Does Saudi Arabia have the muscle to react alone? Probably not. This means they rely on the US. Trump? The judgement of Iran (and their close Russian friends) might well be that Trump is all fur coat and no knickers – they will increasingly test that (disturbingly vivid) thesis.

It remains sensible to be cautiously invested, also bearing in mind the pre-existing factors which have created a vulnerable global environment – for markets, for economies, and for political stability.

P.S. Of course one of those factors is overwhelming debt, of uniquely poor quality. Why did Thomas Cook just go bust? Overwhelming debt. And for investors in that debt, with the benefit of hindsight, is was certainly of overwhelmingly poor quality.

P.P.S. The BBC is a marvellous institution, and comedy clearly remains part of its huge brief, with a comedy great the week before last on the Today programme. Rebecca Jones interviewed Canadian author Margaret Atwood about her follow up to The Handmaid’s Tale, a dystopian novel about a young woman in sexual slavery. Rebecca asked “has Brexit fed in to your thinking?”. Wow, the Edinburgh Fringe calls.