Crude Awakenings: Iran & Israel

Things are heating up over in Iran land. It usually starts with whispers and some saber rattling, but the situation between Israel and Iran is starting to grow roots. As a result, crude $USO has moved solidly higher the last five or six trading days and closed yesterday above the 200 day moving average. Crude has bumped higher on days when the dollar has been up so that makes me think there are deeper dynamics at work.

Israel sounds like they want to make a move on Iran. If war breaks out will Iran try and close the Straits of Hormuz as they have always promised or will they try and sabotage Iraq’s oil fields in the south? Either way, crude of both varieties, (West Texas and Brent) would make a move the likes of which we have never seen.

Will Israel act unilaterally or will they seek the help of the global community? If they do the latter will anyone even respond?  You wont find Obama and Netanyahu golfing anytime soon and this administration has a very tense relationship with Israel. Here was an open mike chat between Sarkozy and Obama recently discussing Netanyahu.

Sarkozy: ” “I can’t stand him. He’s a liar”

    Obama: “You’re tired of him; what about me? I have to deal with him every day,”

The report was met with silence from the Elysee Palace, the French president’s office, which did not respond to requests for comment.

In Washington, White House spokesman Jay Carney said he had no comment on the conversation or Obama’s response.

So basically we heard crickets.

Many politicians have been caught on an open microphone, no biggy, but I think the sentiment is important.

“If” something does break out between Israel and Iran, we should see a move in crude that we have never seen. This will not do anything to help a global economy that is currently hanging on by a shoestring.

I have warned my Premium subscribers of this possibility for over  week and there will be some smart ways to get in front of this move if things do get messy, we all know crude can rip just on fear itself.

I think everyone should have some exposure to energy here, if for no other reason than a hedge against long exposure.

$OXY and $XLE are two ways to get a seat at the table. As I write this at 5:35 am est. the market is getting spanked on more European fears.


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