Oil: Why the Rally

My view on crude is that the move is a result of increasing tensions in the Middle East. Iran produces 4.3 mm bbl/day, almost 50% of Saudi Arabian capacity and has 13% of global reserves. Good opinion piece in WSJ today lays out why we should all fear the radical Iranian regime and be supportive of a pre-emptive strike even though this will spike crude prices further. Pay now or really pay later. Fear over war breaking out in Middle East over this issue driving fear factor in crude. From a demand standpoint, the slowing European economy will eventually pressure oil prices.

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