The wind is getting weaker? Regarding Iran, it could also lead to these two extreme markets
According to Ali Arouzi, NBC's journalist and station chief in Tehran, Iran's supreme leader, Khamenei, will address the people at a prayer meeting on Friday. This will be the first time in eight years that he has spoken on such an occasion, and such rare speeches generally only occur during periods of serious incidents in Iran. Will Khamenei set off the second wave of the market this time? Before making a judgement, we must know some of the latest analysis.
Is there a risk that oil prices will fall to $ 40?
Since Iranian authorities acknowledged a mistake in shooting down a Boeing jet, demonstrations have erupted in the capital Tehran and elsewhere, accusing the government of covering up the truth, and some protesters have demanded that Khamenei step down. By Wednesday, the protest march has entered its fifth day. Obama-era national security adviser James Jones said on Sunday that the Iranian regime, which is struggling internally and externally, is "closer than ever to collapse."
Iran's economy has been hit hard by U.S. sanctions in recent years. According to US Secretary of State Pompeo last week, the current US government has reduced Iran ’s oil revenue by 80% and Iran is unable to use about 90% of its foreign exchange reserves. He also said that U.S. sanctions have cost Iran more than 200 billion U.S. dollars and that if Iran's "illegal behavior" continues, the U.S. will continue to impose sanctions.
Commenting on the turmoil in Iran on the CNBC show, Johannes Benigni, president of energy research agency JBC Energy, said that the collapse of the current Iranian government will have a significant impact on energy prices and oil prices are likely to plummet to $ 40 / barrel .
"For the crude oil market, the replacement of the Tehran regime will likely bring the price of oil down to $ 40 / barrel. Keep in mind that Iran can easily increase production by 1.5 million barrels per day in the shortest period of time, maybe even 2 million barrels per day. This is a A huge number. "
Bernini also pointed out that from a broader perspective, the oil market does not have much upside potential:
"Don't forget that 6 million barrels of production capacity are currently on the sidelines, of which 2 million barrels come from Iran. If more pressure is put on Iran, it will at best only reduce the daily export of 100,000 or 200,000 barrels of oil to China. How much upward momentum has been given to oil prices. Only if there is a real military confrontation can it help fuel prices. "
Is it possible for oil prices to rise above 100?
On September 14, 2019, the main Saudi oilfield was attacked, and oil production was reduced by more than half (about 5.7 million barrels per day), but the oil distribution was firmly in the range of 70-75 US dollars. In the first year of 2020, the Iranian general was killed, and then Iran Hitting Iraq ’s U.S. military bases, the attempt to break through the $ 70-75 range has not been successful.
Oil analyst Simon Watkins wrote in Oilprice that the United States is sparing no effort to control the distribution of oil in the $ 70-75 range, mainly because of the Trump administration's consideration for re-election. After all, rising oil prices can quickly change the probability of the United States falling into a recession, and at the same time prompt the Federal Reserve to shift its monetary policy, thereby threatening the performance of US stocks. "Doctor Doom" Nouriel Roubini has just warned that if oil prices rise to $ 80, global stock markets will fall by at least 10%. Bush-era energy adviser Bob McNally has also emphasized that nothing frightens the President of the United States more than a spike in gasoline prices.
So why choose the $ 70-75 range? Because this is the key psychological and technical resistance level of cloth oil, which can prevent cloth oil from continuously rising above $ 75. Technical analysts believe that if cloth oil breaks through $ 75, it will almost certainly push oil prices to rise to or exceed $ 90 and move towards triple-digit levels.
Since even market analysts can figure out Trump's careful consideration, Iran cannot fail to know. So, whether it is for revenge or to save the country's economy, will Iran make a move to push up the price of oil?
According to China News Agency, Iran ’s supreme leader Khamenei stated in a television speech on the 8th that the Iranian Islamic Revolutionary Guard ’s previous actions against the US military had only “sucked a slap in the United States”, and the revenge had not yet ended. There are also Iranian sources who point out that everything shows that Iran has not actually started to fight back for the killing of General Suleimani, and there may be more actions in the future. He also mentioned that in the next two months or so, Iran will almost certainly consider two strategies: one is to strike against Saudi Arabia; the other is to cut off oil transportation in the Strait of Hormuz, which may even be carried out simultaneously.
Iran severely warned to block the Strait of Hormuz in 2011-2012, which caused the price of oil to soar to US $ 128 / barrel at that time, while the domestic gasoline price also rose for several weeks to US $ 3.9970 / gallon.
As for the first possibility, James, an analyst at the international energy investment agency Tribeca, said that the energy market has not yet taken into account the risk of a new attack on Saudi Aramco facilities. Instead, the market sees current tensions as The "cold war model" believes that neither Iran nor the United States wants to be involved in a comprehensive military conflict.