Storm Clouds gathering in the Persian Gulf

Weekly Report - 17/06/2019

Tensions increases in the Gulf

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As of press time a third aircraft carrier, British, either the HMS Queen Elizabeth or the HMS Prince of Wales, the admiralty would not specify, is steaming toward the Gulf of Oman to join the USS Lincoln, the USS Kearsage and the FS Charles De Gaulle. Not to mention the strategic bomber task group of B52s currently billeted at the Al Udeid AFB in Qatar. Very serious firepower in a very tense zone. In the last two months, six ships have been holed and a major pipeline attacked. The questions are by whom and why has the price of crude not moved at all?

The Week that was


Off the coast of Oman near the city of Al Fujairah, two large tankers were holed last Thursday. No injuries were incurred as the crews of both vessels were rescued. An incident of this magnitude would, under usual circumstances, caused great consternation, an investigation as most assuredly, a spike in the oil price. Rather, zip. Nada. Gornisht. This is a curious phenomenon. Would not those bodies requiring large, constant and reliable supplies have rushed to buy as much crude as they could prior to said expected price rise? Last week the answer was, clearly, No.

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The week that will be


While the oil price has not moved in the face of such broad chaos and violence just outside the gulf, the next event that we are looking for will be an attack against a US flagged vessel. This is not likely because the only such vessels in the region are military, armed to the teeth and likely not vulnerable to any such threat of holing as we have seen thus far in the region over the last month. Nor for the same matter are there British or French flagged maritime vessels plying the Gulf routes. Still, with tension wound this tightly, it just would not take much to cause ignition or detonation. Should US interests be directly attacked we expect the oil price to spike well above $70 for WTI and 80 for Brent. We are keeping our powder dry (meaning assuring that our trading accounts are sufficiently funded to exploit any opportunities that the market presents), and our eyes peeled. Praemonitus praemunitus. (Forewarned is forearmed).

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