Israel and Iran: Is the Fix In?

While acknowledging some short-term risk, we are maintaining our forecast range for crude oil at $60 to $80. Israel’s attack on Iran, if it succeeds in terminating Iran’s nuclear ambitions, would be the best possible thing to promote global oil market stability. The key is for Iran to be isolated in this crisis, especially from its military ally Russia, whose involvement raises the specter of superpower confrontation. With Russia calling for diplomacy and offering to mediate, it feels like the fix is in – we may be seeing the results of a swap pre-arranged by Trump and Putin in which the US stands aside on Ukraine and Russia stands aside on Iran. Oil prices have been volatile, but contained within the year’s range, which is almost precisely what we forecasted late last year. All the price action is in the spot market, suggesting all the risks are in the short-term.