Middle East: Good Cop, Bad Cop & The Bactrian Camel
Investment Conclusion
The Israeli attack on Iran was coordinated with the US. The strategy is intended to force Iran to denuclearise on President Trump’s terms. Thus escalation will be limited for now as Iran cannot afford it and Israel has absolute intelligence dominance to make it a direct threat to the mullah’s regime.
There will thus be a lull between the first and second war humps of our Bactrian Camel. But Iran will not crawl back to Washington suing for peace as President Trump hopes. That is why the second more deadly hump of war will be next.
Do not rush into energy assets or safe havens right now. Global oil prices are unlikely to be hefted for long as there will be no supply interruptions this time. There will lull and investors will interpret this Israeli operation as just one more surgical strike that leaves the global economy unaffected. Wait to buy into energy as a safe have asset until this belief is generalised.