It is important to explain the events leading up to the current US-Iranian tension, as well as what that tension could mean for the future. There is no great segue into this, so without further ado…
It is announced that the US will pull out of the 2015 Iran Nuclear deal. Next, a “maximum pressure” campaign is launched with intention on re-negotiating the nuclear deal.
August 2018 /November 2018 /April 2019
US implements new sanctions on Iran.
May 5th, 2019
National Security Advisor John Bolton releases a statement regarding potential Iranian attacks.
May 8th, 2019
Iran announces they will increase uranium production.
May 9th, 2019
Reports of Defense Secretary Patrick Shanahan’s plan to send in 120,000 U.S. Troops in the event of an Iranian attack.
May 10th, 2019
U.S. Sends a warship and other military equipment to the Middle East.
May 12th, 2019
Near the strait of Hormuz, four oil tankers are attacked (two Saudi, one Emirati, and one Norwegian).
May 14th, 2019
Multiple Saudi pumping stations attacked by armed drones. Houthi rebels hiding in Yemen claim responsibility.
May 15th, 2019
Partial Evacuation of US embassy in Baghdad ordered.
June 13th, 2019
Two more Tankers (one Japanese, one Norwegian) are assaulted Strait of Hormuz while diplomatic discussions take place in Tehran.
June 17th, 2019
Iran announced that it would surpass the uranium enrichment levels stipulated within the 2015 nuclear deal in ten days.
June 20th, 2019
Iran shoots down a United States drone it claimed was invading their airspace. Then, the U.S. provides evidence that the drone was in international waters. President Trump approves airstrikes of strategic Iranian targets, but the strike ultimately does not happen.
June 24th, 2019
President Trump Signs executive orders imposing financial sanctions on Iranian leaders.
June 25th, 2019
Me writing this:
All jokes aside, what does all this mean for the United States and Oil in general?
As June 2019 concludes, the anticipated US-Iranian conflict has prompted international Brent Crude to climb ~5%, while concurrently West Texas Intermediate climbed more than 10%. (WTI’s biggest monthly gain since Dec 2016)
While WTI and Brent crude appear to be trading higher than “Pre US-Iranian Conflict” numbers, will this trend hold as we move into July?
Neither Country seems to be gunning for an all-out brawl, but further escalation may be inevitable.
While a factor, Iran is but a small part of a much larger equation that dictates oil pricing. Eventually, Supply/Demand will dictate the future price of oil and uncertainty is likely to lead to volatility.
Keep an eye out for the July Check in!