The threat of Trump’s “change of administration” in Iran is being greeted with mild and enthusiastic by the market

Donald Trump threatened a “change of government” in Iran early this morning, and intuitively oil prices I declined It will return to its large location ($76/barrel) before the US bombing of Iran’s nuclear facility. Certainly, the price was $79 for short spikes. But the decline took place despite Iran’s threat of closing the Strait of Hormuz, a transport bottleneck in the Persian Gulf, where world oil flows.

VIX’s Volatility Index (the so-called “Fear Index”) fell 6% this morning, while S&P 500 futures rose 0.22%.

Why are investors so calm in a world filled with war and chaos?

Because Iran’s options in terms of ruining the oil market are actually quite limited.

First, if Iran closes the strait, the country that hurts most will be itself. Iran needs as much oil revenue as other parts of the world need Iran’s oil. And the US will barely feel the strait closure There is very little oil from the Gulf region. China is the main buyer of Iranian oil and is a Tehran ally. So we can see why investors don’t think Iran will shoot itself with that particular foot and why Iran hasn’t actually closed the channel yet.

Historically, it would be very unlikely that Iran would actually block transportation routes. According to George Vessey of Contra, the Iranian regime has never done that in its five-year existence. And if that were the case, it would strengthen the US dollar – it has gone through weaker places these days. (Since oil contracts are settled in dollars, as prices rise, demand for the dollar increases.)

“Turned by a strike, the market was priced for diplomatic progress. The euro was strengthened, the dollar softened, the safe shelter muted, and the oil fell almost 3% on Friday. Through the product channel…threat alone is set to adjust as investors begin to unlock bets for the bearish US dollar,” Vessey told clients.

Elsewhere, investors are beginning to suspect that Saturday’s bombing appears to be a closure during a period of uncertainty rather than the beginning. The current situation is that Iran’s air capacity is lost, the nuclear weapons programme has at least been severely damaged, its ability to punish the world for rising oil prices is limited, and the first military retaliation for further bombings by Israel is one in one (one!

“A weakened Iran, which lacks nuclear capabilities, will remove the biggest threat to the Middle East and Israel, which are considered positive, especially for the market and tech stocks, as investors digest the news,” Wedbush’s Daniel Ives and his team told clients this morning. “The market sees this Iranian threat as disappearing now. It is aggressive in the growth of the broader Middle East and ultimately the high-tech sector. This conflict takes time for it to be resolved, but the market imagines the worst.

Nevertheless, what would it look like if Iran suppressed the oil market?

According to Goldman Sachs, each barrel could have a “presumed geopolitical risk premium.” “We believe there are two types of oil destruction scenarios, rather than 1) cutting only Iran’s supply ($80) and 2) wider disruptions in local oil production or transportation ($110 Brent) ($110 Brent)).

Here is a snapshot of the action before the New York Opening Bell:

• S&P 500 It closed at 5,967.84 on Friday, with a 1.47% YTD increase.
• this morning, S&P futures Oil prices spiked at $79 per barrel for a short time, then rose 0.22%, then dropped above $76.
• VIX Volatility index fell by 6% this morning.
• Stoxx Europe 600 and UK FTSE100 Both were flat with early trading.
• Bitcoin It returned above $101K after hitting a low of around $98,000.
• China and Hong Kong It was roughly up this morning.
• Japan, Korea, and India Everything has faded.