Iranian Crisis Could Send Oil To $100

0
239

Oil Price: Oil prices started the year on a high note as some geopolitical tension pushed aside bearish concerns. Both WTI and Brent opened above $60 per barrel for the first time in years.

The protests in Iran were the main driver of the bullish sentiment in the oil market. Anti-government demonstrations swept across the country in recent days, and unlike the widespread protests in 2009, the current rallies are related to economic woes and are also taking place in more cities than just Tehran. “Growing unrest in Iran set the table for a bullish start to 2018,” the Schork Report said in a note to clients on January 2.

At least 14 people have been killed in the protests and an estimated 450 have been arrested. It is the most serious challenge to the Iranian government in years, and Iran’s Supreme Leader put the blame on foreign agents, presumably the United States. more …

Opinion: One hundred dollar oil is counter-intuitive really. Higher oil prices will bring more fracking thereby assuring a cap on oil. Makes sense, unless something unexpected happens, that is.

And Iranian protesters just may be the unexpected.

We have at least a half dozen posts on the possibility of higher oil prices. Before the Iranian protests the main reasons had nothing to do with rig count or an over-abundance of supply. It had everything to do with Israeli energy becoming commercially available in 2018, and that was putting myself way out on a limb with a saw.

Oil Plunged:

In 2014-15   oil and natural gas plunged into a major bear market. Small energy companies went into bankruptcy and larger companies’ stocks plummeted. The miracle of fracking changed everything and when a company named Tesla exploded onto the scene with great-looking high performance electric cars, oil looked doomed forever.

5 Year Crude Oil Prices - Crude Oil Price Chart

Even in early 2017 a rise in prices seemed impossible. Oil tankers were said to be staying at sea because no one needed any more oil and President Trump announced he was ready to sell the emergency strategic oil reserve.

In March 2017, however, a Paris-based intergovernmental group International Energy Agency (IEA), said “Worldwide demand for crude oil will exceed 100 million barrels per day (mbd) in two years, and exceed global supplies in three.”

Then in May 2017, Bill Strazzullo, chief market strategist at Bell Curve Trading — who correctly called for crude’s plunge to the $30 range back in 2013 — said oil could be on the verge of a massive rally, and one month later oil analyst Dan Dicker (oil price.com) said this: “With deep regard for fundamental supply/demand, I think I can make a strong case for $120 oil in 2018.”

Aside from an economic crunch from high oil prices here, why is this important?

Israel has had massive (understated) energy finds since 2010:

  • 2010: Massive natural gas found in the Levant and Temar fields
  • 2016: Massive oil reserves found in the Golan heights
  • 2016: Israeli oil reserve located near the Dead Sea

Iran exports 22% of its oil to China, 14% to Japan, 13% to India, 10% to South Korea, 7% to Italy, 7% to Turkey, 6% to Spain and the remainder to France, Greece (& other European countries), Taiwan, Sri LankaSouth Africa.

If those supplies become disrupted and the global price climbs, it would be just in time for Israel’s oil and gas reserves to be commercially available to compete with Russia, whose economy depends on selling oil and gas.

And a financially-strapped Russia that lives and dies on oil and gas revenues, is a perfect backdrop for the war of Gog and Magog as described by Ezekiel 38-39.