As a change of regime in Iran may affect world oil prices

This week, high -ranking Israeli officials said their military campaign against Iran could cause a regime to fall, an event that would have huge consequences for the global oil market.

The oil market reacted with excellent restraint because Israel bombed the third -largest raw material producer in OPEC for eight days, without the exact sign that the conflict will end soon.

Oil prices have risen about 10% since Israel started an attack on Iran a week ago, but with the example of oil, both oil in the US and the Brent global landmark remain below $ 80 a barrel.

Risk Growth

However, the risk of impaired supplies, which causes a large splash of prices, is increasing, the longer than conflicts, energy analysts believe.

President Donald Trump has threatened the life of Iran’s High leader Ayatollah Ali Khamenei and is considering helping Israel to destroy the Islamic Republic’s nuclear program. For its part, Iran’s leadership is more likely to focus on regional oil facilities when it feels that the very existence goes on the display, analysts note.

The main purpose of Israel is the degradation of the Iran’s nuclear program, said Scott Model, CEO of the Rapidan Energy Group Consulting Firm. But Jerusalem also has a secondary goal – to harm Iran’s security institution to such an extent that the country’s domestic opposition may rise against the regime, Model said.

“They do not call it a changing regime, they call it a change regime from the inside,” said Model, a former CIA officer and an Iranian expert who served in the Middle East.

The official denial

Prime Minister Benjamin Netanyahu denies that the regime’s change is the official goal of Israel, informing the public TV presenter on Thursday that internal administration is an internal Iranian decision. But the Prime Minister, as a result, as a result of the conflict, can fall into the Khamenea regime.

On Friday, Israel’s Defense Minister ordered the Israeli military to strengthen the Iran’s strikes in order to “destabilize the regime”, striker on the “basics of their power”. Israel was reportedly sought to kill Hamenia on the days of opening his companyBut Trump put a veto on the plan.

There is no sign that the regime in Iran is on the border of the collapse, Model said.

But further political destabilization in Iran “can lead to much higher oil prices that are supported for long periods,” said Natasha Kaneva, head of the world’s JPMorgan, in the client’s note this week.

According to JPMorgan, since 1979 there have been eight cases of regime changes in large countries producing oil. Oil prices averaged 76% at peak due to these changes before you distract back to stabilize at about 30% higher than the previous crisis, the bank reports.

For example, oil prices have almost three times increased from mid -1979 to mid -1980s after the Iranian Revolution dropped Shah and brought the Islamic Republic to power, JPMorgan reports. This caused the world economic recession.

Recently, Libya’s Revolution, which overthrew Muammar Gaddafi, has rejected oil prices from $ 93 a barrel in January 2011 to $ 130 a barrel until April of the same year, JPMorgan reports. According to the bank, this spike coincided with the European debt crisis and almost caused a global recession.

Greater than in Libya

Changing the regime in Iran will have a much greater impact on the global oil market than the 2011 revolution in Libya because Iran is a much larger manufacturer, Model said.

“We will need to see some strong indicators that the state stops, that the regime’s change is starting to look real before the market really starts the prices of three plus a million barrels a day, going off offline,” Model said.

If the regime in Iran believes that it is facing the existential crisis, it can use its short -acting missile reserves to orientate on energy facilities in the region and oil tankers in the Gulf, said Helim Croft, head of the Global RBC Capital Markets strategy.

Tehran could also try to gain a chorm strait, a narrow reservoir between Iran and Oman, through which about 20% of world oil flows, Croft said.

“We are already getting reports that Iran is very aggressively overwhelming the ships of ships,” Croft CNBC said “Fast money“Wednesday. Catarega and the Greek Language Ministry have already warned their courts to avoid the strait as much as possible, Croft said.

“These are not calm waters, though we didn’t have rockets flying in the Strait,” she said.

Greater than even chances

Rapid sees 70% of chances that the US will join Israeli airstrikes against Iran’s nuclear facilities. Oil prices are likely to raise from $ 4 to $ 6 a barrel if Modell said Fordau would be launched by a key facility for uranium enrichment. He said Iran would probably respond limited to ensure the survival of the regime, he said.

But there is also 30% of the risk of impaired energy reserves, paying on the Persian Gulf infrastructure or the court in the Hormuz Strait, Rapidan reports. According to the company, oil prices can exceed $ 100 per barrel if Iran is fully mobilized to disrupt the delivery.

“In our view, they can break, delivered by the mountains much longer than the market thinks,” said Bob Bob McNali, founder of Rapiran and former Presidential Energy Advisor.

Delivery can be interrupted within weeks or months, said macnali rather than the oil market opinion that it is United States Fifth NavyFounded in Bahrain, resolve the situation in hours or days.

“It wouldn’t be a fracture,” he said.