Oil prices can’t catch a break for more than a day - not even with a high-profile assassination or attacks on Saudi Aramco. The only thing that will override the fundamentals for oil would be a longer-term sustainable hit to supply, and nothing on the geopolitical scene is pointing to that.
The US-Iran De-Escalation Trick
The markets have decided that de-escalation is now the name of the game for the US-Iran conflict. While oil prices initially responded with a nice boost and equities took a dive, the sentiment was short-lived, particularly because Iran’s reprisal attack on Iraqi military bases housing US forces was far less spectacular than the assassination of Soleimani.
Earlier this week, Oilprice.com predicted that the U.S. would further retaliate with airstrikes on Hezbollah-linked targets in Iraq and Syria. On Friday morning, an airstrike was launched in eastern Syria against the Iraqi Popular Mobilization Force, an Iran-backed militia. Reports indicate that there were around eight casualties, with accusations that the strike was actually led by the Israelis, and no confirmation from Washington.
At this point, however, it would be dangerous to assume this is the end, even if WWIII - or anything resembling conventional warfare - is not imminent.
What Hezbollah wants is to get the U.S. out of the region, which includes south Lebanon, Syria, Iraq and Yemen. Of those, Iraq is the key, and the war over influence…