Iran is very confrontational this week because the Ayatollahs wish to get the West to back down from the economic sanctions being imposed and that now seem to have an effect on the Iranian economy. Iran is the second largest exporter of crude and any cuts in exports are bound to affect the European economy that is also navigating around the Greek sovereign debt problem. The fear premium is likely $15 - $20 per barrel because American demand for oil has shown continued signs of deterioration as witness the fall of home sales in January.
The markets seem to focus on Iranian supply but the Iranian economy is not in good shape and the regime could face serious opposition once again if sanctions are working and having a real effect. NYMEX has jumped 6.3% this week and Brent 4.7% as the markets try to understand where prices are headed.
For the week, WTI+$6.35, $109.77; Brent+$5.65, $125.23; RBOB+13.72¢, $3.1528; HO+12.6¢, $3.3159.
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