Iran Stirs The Oil Market

Iran Stirs The Oil Market

For nearly eighteen months, the oil market has been dominated by the pandemic, but as it begins to wane—slowly—other concerns are coming to the fore. Yesterday's attempted hijacking of a tanker in the Gulf of Oman serves as a reminder that any number of geopolitical developments, many centered on Iran, could create new turmoil and possibly much higher oil prices. There are two factors that could send prices lower in the near term—a much bigger impact from the covid virus, specifically variants such as Delta or even newer ones and/or a breakdown in OPEC+ cohesion. All indications are that the latter is unlikely or at least not imminent, while the former does not seem to be a major threat, as vaccinations spread throughout the wealthier, high oil demand nations. (Note: I am not a doctor or epidemiologist so don't consider that any more than a wild guess.) Two recent attacks on tankers in the Arabian Sea/Gulf of Oman area, both ships 'connected' to Israel, would seem to be more than random events but the actual meaning remains uncertain. As I have written before, there is always the possibility that rogue elements or even non-state actors could be involved. Drones have