Iran's Competitive Strategy
Call me a cynic, but it appears that every time that the price of oil starts to decline, Iran manages to stir up some controversy that causes the markets to react. $10 per barrel times 4 million barrels a day provides $40 million per day in extra oil revenue for Iran alone. How many missiles and other arms can a couple of days of incremental oil revenue provide. Just the threat of an interruption in the oil supply can move the market. Just goes to show how many ways there are to compete in the marketplace.
posted by Michael Sick @ 5:54 PM
1 Comments:
I think that US pension fund investments have a larger impact on energy prices, oil and natural gas especially, than events in Iran. Hedge funds primarily investing money from US pension funds, recently controlled 10% of the natural gas supplies. In a tight market, 10% is more than adequate to strongly influence prices. When one hedge fund recently lost billions when natural gas prices started to weaken and then needed to start selling their positions to cover their loan calls, the price of natural gas fell through the floor to less than $4 mbtus from about $18 in 1/06 and then went up to about $7 after they stopped selling.
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