OIL- $300 per Barrel????
I promise I don't make this stuff up.................Will Israel Attack Iran’s Nuclear Facilities Before the End of the Bush Administration? Joschka Fischer Argues Yes Nouriel Roubini
| Jun 2, 2008
I had the pleasure to meet and speak at length over the weekend with Joschka Fischer, former Foreign Minister of Germany and one of the deepest geo-strategic thinkers in the world. He argued with me that – as he fleshed out in a a recent article he wrote for the Project Syndicate – Israel will attack Iran’s nuclear facilities before the end of the Bush administration and that Israel effectively received the green light to this action from Bush during his recent visit to Israel. Fischer was recently in Israel to attend the celebrations for the 60th anniversary of Israel creation. A variety of factors and conversations – fleshed out in his article – have led him to the conclusion that Israel will attack Iran before the end of the Bush administration. This is just an opinion of one – however influential and well-connected – observer; but the arguments that Fischer makes on why Israel may go ahead sound compelling. We certainly don’t know if Israel will act that early – and certainly Israel has signaled that it will not accept an Iran that is nuclear - but let us consider the economic and financial consequences of such action.
First, even before Iran may try to retaliate to this action by trying to block the flow of oil from the Gulf, oil prices would spike above $200 dollar a barrel.
Second, Iran could react militarily to such Israeli action (that would be taken with the tacit support and the military logistic support of the US) by unleashing its supporters in Iraq against the US military forces there. That would trigger a military reaction by the US that would start a sustained air-led bombing campaign against Iran’s military capabilities (air force, anti-aircraft defenses, radar and other military installations, etc.)
Third, Iran would unleash its supporters in Lebanon and Gaza (Hezbollah and Hamas) in a military confrontation with Israel. A broader war will follow in the Middle East.
Fourth, Iran would use both the threat of blocking the flow of oil out of the Gulf and an actual sharp reduction of its exports of oil (an embargo) to spike the price of oil. Oil prices would rapidly rise above $200 per barrel and the US and global economy would spin into a severe stagflationary recession (like those triggered by the sharp spikes in the prices of oil following the staflationary shocks of the Yom Kippur war in 1973, the Iranian revolution in 1979 and the Iraqi invasion of Kuwait in 1990).
I pass no commentary on the above one way or the other. It is just simply something to be aware of.... whether others place weight impacting trading behavior is unknown.