Oil: No-Risk

Oil prices are declaring, "no risk to supply" after President Trump's actions against Iran caused them to stand down in their quest to attack oil supplies. Already we see risk premium fall and tanker rates start to drop. Not even record stock prices and the signing of the U.S.-China trade deal is giving us a bid yet. China is even looking to help the U.S. put more pressure on Iran in joining the U.S. in banning Iranian oil. U.S. Secretary of the Treasury, Steven Mnuchin, told Fox News, "Sunday Morning Futures" with Maria Bartiromo that the U.S. is working closely to cut off Iranian oil. Mnuchin told Maria Bartiromo that the U.S. had eliminated over 95% of Iran's oil revenues. Yet roughly 70% of the remaining Iranian oil exports are being sent to China, which remains Iran's biggest crude buyer.

Still, the oil trade thinks it is unlikely that Iran will attack anything, including oil or oil facilities, while protests break out at home over the downing of the Ukrainian passenger jet. The Wall Street Journal reported that "the Trump administration now believes that the killing of General Soleimani and sanctions its actions have left the regime depleted, with dwindling options".

The Journal reported that “On Sunday, Mr. Trump’s national security adviser, Robert O’Brien, said the government in Tehran is coming under intense pressure, leaving it with few alternatives beyond a negotiated settlement with the U.S". “What’s going to cause them to negotiate is the pressure on their economy, and when you’ve got students out chanting ‘death to the dictator’ and when we have thousands of Iranians out protesting in the street, that’s the sort of pressure that’s going to bring them to the table,” Mr. O’Brien said on Fox News Sunday. The Journal reported that “Mr. Trump quickly countered Mr. O’Brien’s comments, in English and Farsi, with a tweet: “I couldn’t care less if they negotiate. Will be totally up to them but, no nuclear weapons and ‘don’t kill your protesters.’”

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