headline risk

With Iran Offline, Oil Could Jump 30%

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Despite our massive emergency oil reserves (see here), the IMF estimates a halt in Iran crude could produce a rather dramatic effect in the price of oil: “If Iran halts exports to countries without offsets from other sources it would likely trigger an “initial” oil price jump of 20 to 30 percent, or about $20 to $30 a barrel, the IMF said in its first public comment on a possible Iranian oil supply disruption.” “Financial sanctions against Tehran may be ‘tantamount to an oil embargo’ and would imply supply declines of about 1.5 million barrels per day from the world’s … Read more

Like Herding Cats? Try Trading Oil

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Today’s rampant fluctuation in oil was a perfect example of how much political and headline risk from Iran surround the markets.  While nothing fundamental has changed from our initial assessment of the Iran situation seen here, all it took was Iran reiterating they are pissed and the IEA emphasizing to the EU that reserves exist for a reason. NEW YORK—Iran’s threat to immediately halt oil sales to the European Union pushed prices above $101 a barrel, but crude retreated after the International Energy Agency later said it could release strategic inventories if a supply emergency occurred.  Light, sweet crude oil for … Read more

The Ban on Iran: Tehran continues with threats

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As promised, the European Union followed through with their promise to ban all oil imports from Iran today in an effort to halt the country’s nuclear development program.  The halt on oil was accompanied by a number of other provisions including sanctions on trading with their central bank.  Just days after the US, French, and British militaries sent a flotilla of warships through the gulf, the combined effect of the ban and military actions are sure to add pressure to our already tense relationship with Iran who reiterated their threat of a closure of the Strait of Hormuz.  Markets responded … Read more