Navigator: Ochon!
This report examines 9 ways in which the MoU is a disaster for the Middle East and the security of global energy. Then it expands that analysis to list 4 ways the MoU reduces US Global Reach and Power Projection. All have major economic impacts well within the duration of risk assets but are being ignored in their valuation by financial markets.
For how long?
The oil prices are binary. The research here shows that oil is in surplus supply for the next 90 days if the SoH remains open. If it closes the world moves to an immediate 8 -10 mn bpd deficit with an energy cliff when inventories fall to 30 days consumption at the beginning of winter. The first scenario is a $75 to $85/ bbl. scenario. the latter is $100/bbl. scenario.
Together with what we are seeing at the Fed that is the difference between policy being on hold and higher rates.
Taken together, that combination would represent a scenario where the AI bubble would not be challenged by economic reality or a scenario in which it would be and burst.
So the risks are high. My view is that President Trump and the Iranians have a joint interest in keeping the oil flowing. This will not address any of the issues. But it may delay nemesis a few months.