After Soleimani, What If Peace Breaks Out All Over?
Donald L. Luskin
Michael Warren
Monday, January 6, 2020
#WWIII is one thing – but taking out Middle East oil capacity is a way to support prices. 
US Macro
Panic is in the air after the death of Soleimani. But just as with the 2017 “fire and fury” episode with North Korea, such events are more likely indicative of coming peace, not coming war. In terms of oil prices and their effect on the global economy, the risk of a military event in the Middle East leading to an oil price spike is obvious. Yet an equally important risk is that of a price collapse if Soleimani’s death leads to a peace that brings Iranian production back online. Attacks on US oil interests in Iraq would reduce production, and create disruptions, but they would clear a path for increased market share for US Permian production, without risking a deflationary collapse in oil prices. We are leaving our price target for WTI as a range of $50 to $60.
Author Override: 
Donald Luskin and Michael Warren