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Iranian Explosions: Implications And Impact On Oil...HERE WE GO!
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Original Message
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[link to www.zerohedge.com (secure)]
Overnight, the sky over Iran was lit up by at least two explosions targeting military production facilities: one in Isfahan and one in Tabriz. Whether the two explosions are connected remains unclear as the Isfahan target appears to have been an “ammunitions” factory and the explosion in Tabriz occurred at a motor oil factory. Some sources (here) suggest the list of targets hit might be larger and include the Headquarters of the IRGC and some other military targets.
The regime in Teheran is, somewhat predictably, down-playing the impact of the explosions, noting of the Isfahan attack that one drone was shot down "and the other two were caught in defense traps and blew up. [The attack] caused only minor damage to the roof of a workshop building. There were no casualties."
At the start of the Asian open, oil markets might be primed to price higher risks to oil supplies out of concern that: (i) Ukraine war might be spilling over into Middle East, (ii) Iran might seek retaliation in the region, or (iii) general unrest in oil producing countries is bad news for supply.
As Iran seems to be downplaying the attacks and no clear culprit has been identified (despite Ukraine’s early response), any spike in oil prices could be driven initially by algorithmic trades immediately at the open and thus likely to fade as more information becomes available.
Will Oil Prices Spike as Markets Price Increased Destabilization?
Previous episodes of violence and explosions involving oil producing countries has led markets to price supply concerns. In somewhat comparable situations, such as Yemen’s missile strikes against Saudi Arabia for instance in March 2022, the oil price reaction function seemed driven in large part out of concern for escalation.
Will Iran close the Straits of Hormuz?
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