Blain's Morning Porridge, submitted by Bill Blain
"Sand, Sand and more Sand.. no wonder they are so grumpy.. "
Just like comedy, the secret of a market-jarring global shock is TIMING..
As Washington scrambles for face-saving evidence to pin on Iran, there are some pretty fundamental questions to be asked about the weekend precision strikes on Saudi's oil facilities.
There are the obvious market effects to consider: While production might be swiftly repaired and resumed – the price spike is going to change behaviours dramatically in terms of energy trading and hedging. While there is capacity to cover lost production short-term, raising the threat level will change price expectations long-term. How quickly can the globe shift supply from the Middle East if this brews up into a full regional conflict? How could China scrabbling for new oil sources impact prices? The attack begs questions about oil inflation, global resilience to an oil shock, and has every analyst scribbling about his compares to previous oil shocks. And an oil shock in the week the Fed meets to discuss another US rate cut? Interesting….