In case anyone needed another reminder that geopolitical tensions are running high, an “incident” involving tankers in the Gulf of Oman will work.
Crude surged on Thursday after reports of the suspected attacks crossed the wires. Indeed, this looks like one of the better days for Brent in quite a while, a welcome reprieve considering how hard oil’s been hit recently by global demand worries tied to the trade war.
Anything involving the Strait of Hormuz is obviously big news given tensions between the Trump administration and Tehran. Two vessels were “injured” in the purported attacks, one owned by Norway’s Frontline and the other by Japanese Kokuka Sangyo. IRNA claimed the former (the Marshall Islands-flagged Front Altair) sank, but Frontline says that isn’t true. Taiwanese refiner CPC Corp said it “suspected [the ship] was hit by a torpedo”. Norway’s Maritime Authority said there were three detonations involved.
As far as the Kokuka Courageous, its Japanese owner says it was hit twice in three hours, once by a “shell”. Apparently, it was carrying some methanol from Saudi Arabia to Singapore.
(AFP)
“Recent tariff and nontariff trade restrictions have dominated the news cycle at a time of no additional military tensions in the Persian Gulf”, BofA wrote last week, in the course of explaining the swoon in oil prices. “Still, fundamentals have not changed materially [as] global oil supply disruptions are now at the highest levels in almost three decades [while] global oil demand growth is running at the weakest rate since 2012”, the bank went on to note, underscoring the push-pull.
(BofA)
Suffice to say Thursday’s events probably qualify as “additional military tensions” and they are guaranteed to be blamed on the Iranians, who were widely suspected of sabotaging four vessels a month ago. It’s also interesting that the incident comes just weeks ahead of the next OPEC+ meeting, which has been plagued by scheduling difficulties, themselves a reflection of bitterness between Riyadh and Tehran.
As Reuters dryly notes, “all 44 sailors from the two ships have been rescued by Iranian search and rescue teams, Tehran’s Islamic Republic News Agency reported, citing an unnamed informed source.”
It sounds ominous, especially when you remember that John Bolton is essentially in charge of US foreign policy, but look at the bright side: If oil can finally break out of the doldrums, it might drag up inflation expectations!
Let’s guess who could possibly want global conflict with Iran while simultaneously driving up oil prices?
hmmm… bone saws, anyone?
it’s really a foreign policy insanity loop : increased oil revenues => more money for weapons purchases by SA => more suffering in Yemen => more pushback by iranian-backed forces => more regional instabilty => higher oil prices. Rinse and repeat.
Until somebody makes a mistake.
And all of that under the auspices (he used that word!) of a clearly demented US president who carries an imaginary trade agreement on a single blank piece of paper in his suit.
The world should be terrified.
Equities are anesthetized against negative news it appears almost permanently. This type of event would have been catastrophic even five years ago….Speaks to huge changes in the Equity trading business as well as an understanding that manipulating this system is an end in itself….
true dat.
S&P is up by 0.5 %.
Oils reaction is also far from outszied.
This is laughable.
History will look back and likely call this period as “The Great Oil Wars.” Much of global policy has been in service to the international fossil oligopoly. Recall there are 59 trillion cu/ft of methane under Afghanistan, perhaps the largest untapped NG field in the world, that I believe is the reason for all the turmoil there going back decades. Yes, 9-11 too, is largely due to oil and energy security policy as well. Add to that climate denialism and you have a large part of the picture. Well, that’s my largely worthless opinion anyway. Good luck.
When you add the timing of Venezuela , Libya, Iran Sanctions, Russian pipeline to Germany as well as Saudi actions in Yemen into one scenario you can see that this is all about Geopolitical maneuvering that been brought to a climax stage .. History will confirm this !!!
Thanks BofA for showing the level of disruptions. I doubt oil prices could be supported at these levels without it. With Riyadh and Tehran bickering and Russia doing whatever the fuck it wants, it’s also doubtful OPEC+ will manage a coordinated reduction in supply. Don’t see much upside from here, but putting on my conspiracy theory hat for a second, these events in straight of Hormuz could be false flag ops. Saudi being the only player in the region with access to alternative sea transport comes to mind.