No! I don’t think the ME Deal addresses any of the major issues or makes the world a better place. But it binds Iran and the US together with a common rope of self-interest. Iran, meaning the IRGC thugs, get back into the dollar flow selling oil. And President Trump gets cheaper oil which is a political “must” for him to survive. Neither party will go back to war.
The markets will settle for that. What they care about is more oil supply. Will they get enough? This is what this piece is about. ME Crude Supply will recover faster than output. And faster than expectations. To understand why watch the ships not the rigs. Ships, being driven by greed, will start moving an extra 4-5mn bpd of ME oil within a month or two.
After the initial boost from inventories and increased (undamaged) output, supply will recover more slowly, because it takes investment.
So, this speaks to oil in $75-85/bbl range - with all that implies for Central Bank rates (on hold), growth and inflation. I sold my oil and bought risk assets and more gold for 10-15% of the portfolio. But we face other major problems like the economic and market consequences of the AI bubble, which will limit and possibly annul down the road any rejoicing from the US- Iran Ceasefire. And of course, Iran emerges from this conflict a clear victor and the US a diminished loser. That spells a lot of problems down the road.
Loading Document...
Comments
No Comments Yet