#prayfortheoiltraders appeared on Twitter yesterday as they were taken on a rollercoaster ride with Brent oil prices whipsawing down from 76 dollars to near 73 dollars per barrel even as all those holding $200bn of long oil futures contracts got what they were anticipating - Trump nixing the Iran Nuclear Deal. The expected price reaction eventually came 5 hours later when oil prices moved back up to where they started (the market having mostly priced in Trump’s braggadocio). At the time of writing, Brent prices have pushed above 77 dollars a barrel setting new highs – that is since the paradigm shift of oil markets in late 2014 (prices would still have to rise a further 50% to approach where they were in the first half of this decade).
One must wonder how the German chancellor Angela Merkel is feeling this morning, after her overwhelming, yet ultimately disappointing election result yesterday. Although Merkel’s conservative party took the largest share of the vote at 33%, this was down nearly 9% from the 2013 election, and the lowest percentage of the vote since 1949. Merkel’s coalition partners, the Social Democrats (SPD), also slumped to a postwar low of just over 20%, and have announced it will go into opposition.
After years in the international wilderness Iran was finally brought back into the fold in July this year. The agreement reached between Iran and six world powers – the 5+1 of China, France, the US, Russia, the UK plus Germany was for Iran to scale back its uranium enrichment programme in exchange for an end to the economic sanctions that have crippled the economy for years. The 5+1 term refers to the UN Security Council's five permanent members plus Germany. Not all the international community was happy with the deal, with Saudi Arabia and Israel being particularly vocal with their opposition. Israel's Prime Minister Benjamin Netanyahu said the deal posed a grave danger to world peace saying "Unleashed and unmuzzled, Iran will go on the prowl, devouring more and more prey," adding "In the wake of the nuclear deal, Iran is spending billions of dollars on weapons and satellites. Do you think Iran is doing that to advance peace?"