Investment Management Division Risk of a US-Iran Military Conflict and Other Geopolitical Risks May 23, 2019 Investment Strategy Group Discussion Topics Investment Management Division I. US Policy on Iran II. Iranian Actions and Current Economic Conditions III. Potential for US-Iranian Military Conflict IV. Implications for the Global Oil Market 1 Risks to Our Views (Presented in our 2019 Outlook) Investment Management Division • In the near term, the most likely source of a domestic shock is the fallout from one of the investigations—by multiple state attorneys general and the House of Representatives—of President Trump. • The ebb and flow of these investigations will inevitably lead to great market volatility. But there is greater likelihood that exogenous shocks will come from external sources, rather than domestic ones. • External exogenous shocks – Trade War with China (5/17/2019 ISG Client Call) or continued slowing growth in China – Brexit – Auto Tariffs – Russia – Middle East – North Korea – Cyberattacks – Terrorism Source: Investment Strategy Group. 2 Timeline: US-Iran Tensions Rise Investment Management Division Recent Key Events in US-Iran Relations Date Category Event 7/14/2015 JCPOA JCPOA* finalized between Iran and P5+1 10/13/2017 JCPOA President Trump de-certifies compliance of Iran with JCPOA 5/8/2018 JCPOA President Trump withdraws from the nuclear agreement 8/6/2018 Sanctions Reimposition of sanctions on Iran (precious metals, currency, sovereign debt) 11/4/2018 Sanctions Sanctions imposed on Iranian petroleum, shipping sector, energy sector, etc. Six-month waivers issued to eight countries that purchase Iranian oil 4/8/2019 Diplomatic Action US announces it will designate the IRGC as a foreign terrorist organization 5/2/2019 Sanctions Waivers for Iranian oil purchases not renewed 5/3/2019 Military 5/5/2019 Military US intelligence suggests mobilization of Iranian forces, including photos showing IRGC loading missiles onto ships Bolton announces U