Traders underestimate the situation with Iran

Oil traders are not ready for the next escalation between the US and Iran. Trump today effectively activates new sanctions against the Islamic Republic. So far, six attacked oil tankers and one downed US intelligence drone is the result. All of this is happening in the Straight of Hormuz, which is the busiest part of the oil courses, and which separates Iran from the other neighboring countries in the Gulf.

The prospects for a new international conflict triggered Brent's price 5% last week and WTI jumped by nearly 10%. The most robust rise in oil prices since December 2016. However, a number of energy analysts believe that traders underestimate the situation and are not prepared for the next escalation of tensions between Washington and Tehran. The price has not appropriately calculated geopolitical risks. With the imposition of the new sanctions of today, Iran's answer will surely not be late.

Despite the reversal of military strikes against Iran at the last minute, the chances of intensifying the conflict are very, very high. Trump does not want a direct war with Iran, but said that if a military collision occurs, there will be an "unprecedented erasure". And Iran will not hesitate to answer.

Rhetoric that oil can be fired at $ 100 is also heavily exaggerated. Earlier, Yahya Rahim Safavi, Iran's top general, warned that "the first shot in the Persian Gulf will push the oil price above $ 100."

However, analysts remain skeptical about this scenario with more conservative expectations. A jump of $ 5 to $ 10 is much more realistic, at least after the initial impulse. For now only the two countries will respond and impose sanctions, but when? The war is still far away, but again: when?

Source: CNBC

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